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REVIEW OF COOPERS & LYBRAND INDEPENDENT FINANCIAL ASSESSMENT OF THE FEDERAL AVIATION ADMINISTRATION
THURSDAY, MARCH 20, 1997
U.S. House of Representatives,
Subcommittee on Aviation,
Committee on Transportation and Infrastructure,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9:30 a.m. in room 2167, Rayburn House Office Building, Hon. John J. Duncan (chairman of the subcommittee) presiding.
Mr. DUNCAN. The subcommittee will come to order.
I would like to welcome everyone here this morning. The focus of our hearing today is to review the recent financial assessment of the Federal Aviation Administration by the accounting firm of Coopers & Lybrand. The Federal Aviation Reauthorization Act, Public Law 104–264, required the FAA to commission an independent assessment of the agency's financial needs.
Let me say that, given the 90-day requirement, I know that Coopers & Lybrand had a very difficult job in identifying a number of challenges and decisions facing the FAA. Hopefully, this report will be very helpful to the subcommittee, the FAA, and the National Civil Aviation Review Commission which was also established in the FAA reauthorization bill. In fact, a majority of the Commission's 21 members were appointed last week and I am hopeful that they will begin their work as soon as possible.
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I also want to mention that we had many requests by several individuals and organizations to testify today. Although we tried to accommodate everyone as best we could, we unfortunately sometimes are unable to do this because of the sheer numbers of those requesting to testify. Those that we were unable to accommodate this morning can still submit written testimony for the record on this very, very important subject.
Let me just briefly explain the history of how we got to where we are today with this Coopers & Lybrand study. In 1995, the FAA estimated that its total cost to operate over a 7-year period between 1996 and 2002 would be $59.8 billion. Given the FAA's 7-year operating projection coupled with the spending assumptions included in the congressional budget resolution for fiscal years 1996 through 2002 of $47.7 billion, the FAA estimated that it would have a cumulative 7-year deficit of $12.1 billion.
Many questioned the accuracy of the FAA's 7-year operating estimate of $59.8 billion and the claims of the $12.1 billion deficit. Discussions associated with the perceived funding shortfall, the debate regarding an entirely new user fee financing structure, and the allocation of those costs to users crystallized the need for an independent assessment of the FAA's basic financial requirements.
The report does conclude, however, that the FAA's original financial needs estimate of $59.8 billion is reasonable given a status quo operation; basically, if the FAA continued to operate as it does today without imposing any cost efficiencies. On the other hand, the Coopers & Lybrand report also mentions that additional requirements placed on the agency in the future could increase the cost of its operations.
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So we need to look at all of these issues and do the best we can to help the agency become as productive as possible. I know this subcommittee looks forward to continuing our working relationship with the FAA and others to help improve the agency or at least give the FAA the tools necessary to make its operation more business-like and productive. I hope that this report will prove to be helpful.
I wish that once in my life somebody would give me $900,000 to complete a study. That seems to me to be almost an obscene amount of money for this type of study. But I suppose that this was a big operation and a difficult task. So I hope that we do get some benefit from that tremendous expenditure. I sometimes have my doubts as to whether the Federal Government needs another study of anything, but at least we've got what should be a first-class working document at this time for the Commission and for the FAA and others to work with. We'll just see where it leads.
At this time I would like to welcome the Ranking Member, Mr. Lipinski, for any comments that he has at this point.
Mr. LIPINSKI. Thank you very much, Mr. Chairman. We have a lot of things to cover today and I think you did a superb job of presenting why we are here. I have a statement which I'll ask to have included in the record, and I will yield the time back to you.
Mr. DUNCAN. Without objection, we'll certainly include your statement in the record. Thank you very much.
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[Mr. Lipinski's prepared statement follows:]
[Insert here.]
Mr. DUNCAN. Mr. Metcalf, do you have a statement?
Mr. METCALF. No statement.
Mr. DUNCAN. Mr. Hutchinson, do you have a statement?
Mr. HUTCHINSON. No statement.
Mr. DUNCAN. Then we'll get right to the witnesses. We've had Senator Lautenberg here before and we're certainly honored to have him back with us today. We have Senator Frank R. Lautenberg, who is the United States Senator from the State of New Jersey, and our colleague Frank LoBiondo, who is a great Representative for the State of New Jersey. Gentlemen, you may proceed with your testimony.
Senator Lautenberg, we will let you go first.
TESTIMONY OF HON. FRANK R. LAUTENBERG, A U.S. SENATOR FROM NEW JERSEY
Senator LAUTENBERG. Thank you very much, Mr. Chairman. It's kind of you to permit me to testify this morning. I'm pleased to join my colleague, Congressman LoBiondo. We are presenting two frank views of New Jersey this morning. Well, that didn't go over very well.
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[Laughter.]
Mr. DUNCAN. I thought it was pretty good, Senator.
Mr. LIPINSKI. I thought you'd say objective views of New Jersey.
Senator LAUTENBERG. We want to talk about a small, but very important, section to the Coopers & Lybrand report on the William Hughes FAA Tech Center in New Jersey. This section suggests that consolidating the FAA Tech Center in Pomona, New Jersey, with the Aeronautical Center in Oklahoma City is economically justified and should be evaluated from a cost-benefit perspective.
In a review of the recommendation, the FAA said, ''It should be removed in its entirety,'' talking about the section, ''since the analysis does not support the recommendation.'' I strongly concur with that assessment. I was the chairman, now ranking member, of the Senate Transportation Appropriations Subcommittee, and I've done a lot of work on the contribution that this center makes to our aviation security and safety. It would be a significant setback to civil aviation if we destroy this national resource.
The Tech Center is the national scientific test base for FAA research, development, acquisition programs. It's involved in air traffic control, communications, navigation, airports and aircraft safety and security. Everyone is aware of the fact that our aviation system is straining at the seams. It's growing by leaps and bounds and is projected to grow even more. We need as much as we can get by way of good research on what to do with it.
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Over the past 15 years, the Federal Government has invested almost $200 million to make the Tech Center the world's premiere aviation testing and development center. We ought not to tear it apart.
Mr. Chairman, it isn't just the Tech Center's facilities that are the best of its kind. In many cases the Tech Center facilities are the only ones of their kind. The Center has the only integrated aviation laboratory in the country, which actually replicates the air traffic control systems that exist in the field. And, once again, everyone knows that there's a lot of work required to update the system. It's also the world's only laboratory specifically dedicated to aviation security. The laboratory is a major resource for the aviation community, and it has become an important asset in the investigation of the TWA 800 disaster.
The Tech Center has the only full-scale fire test facility in the world which can replicate fires associated with aircraft accidents and figure out ways to make those airplanes safer.
The Tech Center is also about to break ground on a $21 million airport pavement test facility, which will be the only one of its kind in the world. It will test new pavement designs to serve a new generation of heavier aircraft with more complex landing gear systems. The FAA expects this research will save over $1 billion in funds which would otherwise be spent simply repaving runways at existing airports.
With all of this comes a workforce that I think is second to none, both in experience and training, workers who strive to perfect technologies and products that make our airports safer and our aircraft better.
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Moving the Center would place significant financial burdens on the taxpayers due to worker relocation costs and the duplication of the extensive infrastructure which already exists in New Jersey.
I would like to highlight a major flaw in the report. The report cites competition for Technical Center real estate, talking about the real estate that surrounds and includes the Tech Center, as one way for the FAA to benefit financially. The authors of this report apparently fail to understand existing legal arrangements between the FAA and the local transportation authority. Under the terms of a binding reverter clause, if the FAA vacates this property, it is legally bound to sell the majority of the land to the local transportation authority for a mere $55,000—geometrically less than the land's estimated $147 million value. So, if the FAA abandons this site, it will exchange $147 million in Federal assets for $55,000. I don't have to say it, but penny wise and pound foolish really fits this one.
Congressman LoBiondo and I agree with the FAA that the Tech Center is a cornerstone of the FAA's safety and security program. It is a unique and valued asset. We strongly support it. We urge the committee in the strongest possible voice to reject the Coopers & Lybrand recommendation to dismantle the Center. To do so would be to deal a blow to national efforts to advance state-of-the-art technology that enhances aviation safety and security.
I thank you for this opportunity once again, Mr. Chairman.
Mr. DUNCAN. Thank you very much, Senator. What I ordinarily do, since we try to get to other witnesses as quickly as possible, our regularly scheduled witnesses, and we know that members have such a busy schedule and we do have our opportunities to talk to members privately, I generally ask that we refrain from questioning our member panels. So, unless you want to stay and hear Congressman LoBiondo, you're free to go at any point.
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Senator LAUTENBERG. I would like just to do that, and I thank you for the opportunity to leave right after that.
Mr. DUNCAN. That would be fine.
Frank, you may go ahead and begin your testimony.
TESTIMONY OF HON. FRANK A. LOBIONDO, A REPRESENTATIVE IN CONGRESS FROM NEW JERSEY
Mr. LOBIONDO. Thank you very much, Mr. Chairman, for the opportunity to be here today, and to thank Senator Lautenberg for also joining me and for the tremendous efforts he's expended on behalf of air safety and security throughout the Nation, and especially for New Jersey.
We're here today, as the Senator said, to talk about the recommendation made to consolidate the FAA in Pomona with the Mike Monroney Aeronautical Center in Oklahoma. The Coopers & Lybrand assessment recommends that the FAA evaluate the cost-benefit of consolidating the Technical Center with the Aeronautical Center based on the premise that by doing so the FAA might be able to reduce its overall cost.
It is the view of Senator Lautenberg and myself that the Coopers & Lybrand recommendation regarding the Technical Center is seriously flawed. Several conclusions supporting the premise of reducing the FAA's overall costs are based on faulty analysis and incorrect data. Because of the inaccurate assumptions, which I'll outline below, their recommendation should not be heeded.
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The assessment relies, in part, on driving forces to validate itself, one of which is that the Tech Center land may have become increasingly attractive for alternative uses. Senator Lautenberg referred to this, but it is crucial in what we're talking about, and I would like to reiterate that the increasingly value of the land for alternative uses is due in part to the growing strength of the local economy and the rising population. But once again, as the Senator said, the assessment apparently neglected to take into account that the South Jersey Transportation Authority owns a right-of-reverter on over 4,000 of the total acres of the Tech Center. That essentially makes any transfer for profit not only significantly more difficult, but virtually impossible.
Also included in the those observations made by Coopers & Lybrand is the finding that the Tech Center workforce is not universally viewed as technologically capable of meeting the needs of the FAA. Mr. Chairman, to the contrary. The staff at the Tech Center is considered world renown. They're experts at conducting research and development on airport safety and aviation and security.
Similarly, the assessment asserts that the Tech Center's labs appear to be under-used and somewhat in disarray. In response to that, I'm advised that the Tech Center laboratories are well-utilized and ready to support the maintenance of on-site operational systems. Any perception of disarray fails to take into account the continuously changing nature of the labs. The research facilities require an almost constant reconfiguration to adapt to the fluid nature of the research that is performed there.
Mr. Chairman, let me also mention some factors which the assessment did not take into account. The relocation of the Tech Center would entail significant cost associated with moving personnel, cutting jobs, and cost associated with re-establishing the facilities. This was not at all even mentioned in the report.
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In addition, there are two major projects underway at the airport which bear mentioning. First, the FAA and Boeing Company will soon begin a joint project to construct and operate the airport paving test machine capable of testing full-scale airport payments, ensuring that airport payment strength keeps up with advanced landing gears proposed for future heavy aircraft, something that the Senator referred to.
Second, Mr. Chairman, you may remember that in February 1994, a jet aircraft overran a runway at JFK Airport in New York and plunged into a basin, destroying the aircraft and costing $20 million in repairs. A similar accident killed two people in Boston in 1982. To reduce or eliminate such accidents, as a result of extensive research and testing performed at the Tech Center, the FAA has developed preliminary design specifications for a soft ground arresting system which has demonstrated the ability to stop a Boeing 727 aircraft within 300 feet from a speed of about 63 miles an hour.
Additionally, let me also note here that the missions of the Tech Center and the Aeronautical Center differ significantly, requiring specific and unique facilities to accomplish divergent tasks. More than $200 million, once again as the Senator indicated, has been invested in the Tech Center's laboratories. Why waste this investment of the taxpayers?
More predictably omitted from the assessment was the impact the Tech Center would have on the local economy of Southern New Jersey. It employs about 1,600 people directly, overall about 1,500 jobs would be impacted. This would have tremendous significance on the impact of our local economy, and the gross incomes of all persons employed as a result of the Tech Center and living within the region is about $214 million.
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Mr. Chairman and members of the subcommittee, I believe it is clear that the Coopers & Lybrand assessment is way off the mark in its recommendation to consolidate these facilities. We appreciate your consideration of these views and hope that this report will not be at all considered.
Thank you, Mr. Chairman.
Mr. DUNCAN. Frank, thank you very much. Before you go, I would like to ask Mr. Lipinski if he has any comments or questions at this point.
Mr. LIPINSKI. Thank you, Mr. Chairman. I don't have any questions. I just want to say I thank the Congressman and the Senator for their very articulate presentation of their position. I want the two of them to know that I, for one, have received the message loud and clear. Thank you.
Mr. DUNCAN. Thank you very much. As I've previously stated, we do let the members go without questions in order to get to the other witnesses more quickly, and because we can talk to them later in private for those members who have come in.
Mr. DUNCAN. We will now call the first panel. As the panel is getting seated at the table, while they're coming forward, I would like to ask the members who have recently joined us if they wish to make an opening statement.
Mr. Blunt, do you have an opening statement at this point?
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Mr. BLUNT. No statement, Mr. Chairman.
Mr. DUNCAN. Ms. Danner?
Ms. DANNER. No, Chairman, I do not.
Mr. DUNCAN. Mr. Cook?
Mr. COOK. No.
Mr. DUNCAN. Mr. DeFazio, do you have an opening statement?
Mr. DEFAZIO. No, Mr. Chairman.
Mr. DUNCAN. All right. Thank you very much.
We now proceed with the first of our two panels today. We're certainly honored and pleased to have each of these people with us today. We have Mr. Monte Belger, who is the Acting Deputy Administrator for the FAA, he's been here with us many times before, and he is accompanied by Doctor Edwin A. Verburg, who is the Associate Administrator for Administration of the FAA. We're pleased to have also Mr. William Stan Hawthorne, who is a partner with Coopers & Lybrand, and Mr. Hawthorne is accompanied by Ms. Carolyn Smith, the Engagement Director, Mr. C. Morgan Kinghorn, who is a Director, and Mr. Daniel M. Kasper, who is the Project Integration Team Lead for Coopers & Lybrand. Thank you very much for appearing today.
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Mr. Belger, we will begin with your testimony please.
TESTIMONY OF MONTE BELGER, ACTING DEPUTY ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION, ACCOMPANIED BY EDWIN A. VERBURG, ASSOCIATE ADMINISTRATOR FOR ADMINISTRATION; AND WILLIAM STAN HAWTHORNE, PARTNER, GOVERNMENT CONSULTING PRACTICE, COOPERS & LYBRAND, ACCOMPANIED BY CAROLYN L. SMITH, PARTNER, GOVERNMENT CONSULTING PRACTICE, C. MORGAN KINGHORN JR., DIRECTOR, AND DANIEL M. KASPER, PARTNER, TRANSPORTATION CONSULTING PRACTICE
Mr. BELGER. Thank you, Mr. Chairman. I do appreciate the opportunity to represent the Federal Aviation Administration this morning. I have some very brief remarks and would ask that my entire statement be entered into the record.
I am Monte Belger, the Acting Deputy Administrator of the FAA. And as you said, with me today is Doctor Edwin Verburg, who is FAA's Associate Administrator for Administration. We are actually pleased to have the opportunity to appear today to talk about the Coopers & Lybrand study of the FAA's financial requirements through the year 2002. That report, which you have said, was required by the Federal Aviation Reauthorization Act of 1996, and the report also includes an assessment of FAA's cost allocations as well as Coopers & Lybrand's projections of our airport capital needs for the future.
On the whole, we believe the report adequately fulfills the statutory need to provide the National Civil Aviation Review Commission with an independent look at FAA's financial requirements. And this report should offer a useful basis for the Commission to commence its efforts to develop and propose an appropriate financing mechanism for the FAA.
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There are, of course, areas where we take issue with the report. One significant matter, which was just discussed, for example, where we take issue with the report is the recommendation concerning consolidating the Technical Center in New Jersey and the Mike Monroney Aeronautical Center in Oklahoma. I can say very categorically we have no plans to close the Tech Center in New Jersey. We have no plans to consolidate the two facilities.
We do agree with many other conclusions and recommendations, including, for example, that the FAA should develop a cost accounting system. In fact, we supported the inclusion in the FAA reauthorization legislation in the last Congress of a provision to mandate such a cost accounting system for the FAA, and we are currently working to develop such a system. A cost accounting system which provides a more detailed understanding of costs will be a fundamental component of any future large-scale long-term user fee system. Improving our abilities to determine and trace costs is an important step in that direction.
Coopers & Lybrand found that the draft cost allocations study performed by GRA, which is a contractor for the FAA, provides an acceptable interim basis for attributing FAA costs to broad categories of users, and that, despite limitations imposed by a lack of a modern cost accounting system, ''It is possible for the FAA to reliably assign costs to (and, hence, establish cost-based fees for) some specific services and users.'' Coopers & Lybrand has also pointed out a number of measures that they believe could help achieve cost savings over a period of years, which could help offset some of our future year costs.
Clearly, cost savings are of interest to the FAA. While it is critical that we look for ways in which savings can be accomplished, it is also important to recognize, as Coopers & Lybrand did in its report, that the FAA has previously attempted to reduce many of these costs. Our experience working to consolidate or close facilities over the years has demonstrated just how complex that effort can be.
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The report's inclusion of a number of these key points is a useful reminder to all of us just how important it is to effect change, although it is often difficult to achieve that change even when there's general agreement on the overall merits of doing so. As Coopers & Lybrand notes: ''While many of the choices offered in section VI to reduce costs at the FAA may be appealing, each element for cost reduction has its supporters as well as detractors. None of the choices are necessarily easy.''
I believe that these recommendations will provide the Commission with a useful perspective as they begin their analysis and discussions, and will help to serve as a catalyst to achieve broader agreement on some very, very difficult issues.
In closing, Mr. Chairman, let me again acknowledge your support and the support of the Committee in the last few years. I hope, as we go through this hearing, and as we go through the next 6 or 8 months in working with the Commission, and as the Secretary ultimately makes recommendations to the Congress for financial reforms within the FAA, that we keep our eye on what I think is the fundamental target and the fundamental goal, which I believe most of us in this room now agree to, and that is that we have to find a steady and reliable source of income for the FAA in order for the FAA to continue to provide the world-class safety and efficiency services that we do provide.
Thank you. I would be pleased to respond to questions you may have.
Mr. DUNCAN. Thank you very much, Mr. Belger.
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Next, we will hear from Mr. William Stan Hawthorne. Mr. Hawthorne.
Mr. HAWTHORNE. Thank you, Mr. Chairman. I'm Stan Hawthorne, a partner in the Coopers & Lybrand Government Consulting Group, the partner responsible for the overall conduct of this engagement. I am accompanied this morning by Carolyn Smith, also a partner in the Government Consulting Group, seated next to her, Morgan Kinghorn, a Director within the same group, and at the far end of our table is Dan Kasper, who is a partner in our Transportation Practice. We're pleased to be here and to answer any questions that you may have with respect to the financial assessment that we just completed. First of all, I would like to give a very brief overview of this 90-day study.
We recently completed this independent assessment of the financial requirements of the FAA through the year 2002, a study of the allocation of costs that are imposed on the FAA by users of the aviation system and an independent assessment of the Nation's airport capital needs. Our final report was delivered to the FAA on February 28, 1997.
Our major findings can be classified into three major areas as follows:
As we've stated in the report, we believe that the FAA's $59.8 billion budget projection is probably very close to the right number given the current status of the operations of the FAA. However, we also believe that there are significant areas that can be looked at with respect to changing the way that it operates and potentially cost-savings associated therewith.
Secondly, given the large network and the intricacy of the characteristics of the air traffic control business and the FAA's current lack of a cost accounting system, which hopefully will be rectified in the near term, the draft Gellman Research Associates cost allocation study we believe provides an acceptable and reasonable interim basis for attributing the FAA costs to broad classes of users.
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Third, our best guess, and I emphasize it is a guess, with respect to airport capital requirements for this timeframe are likely to fall within a range of $7 to $8 billion. Unless there is a willingness to invest in an extensive and costly data collection effort to better analyze these costs, we're faced with basically living with the best guess, as we've done here. It is virtually impossible to come to better terms with what those airport capital needs are given the current state of the data available to us.
This concludes my opening summary. We would be pleased to answer any questions that you may have at this time.
Mr. DUNCAN. All right, Mr. Hawthorne, thank you very much.
We'll go first to Mr. DeFazio for any questions that he may have at this time.
Mr. DEFAZIO. I have no questions, Mr. Chairman.
Mr. DUNCAN. All right, Doctor Cooksey, do you have any questions?
Mr. COOKSEY. No questions.
Mr. DUNCAN. All right. Mr. Cook?
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Mr. COOK. Yes, Mr. Chairman.
Mr. Hawthorne, in the Coopers & Lybrand report, you indicate that the $59 billion over those years may be reasonable. Does that mean it's reasonable based on the way things are going at the FAA? I know you indicate some drift and some real concern over the lack of a cost accounting system, but you're not necessarily saying, are you, that is what the budget ought to be assuming all these problems are taken care of and assuming there's a cost accounting system? In fact, if there isn't a cost accounting system, as your report indicates, how can you be even sure at all of this $59 billion number?
Mr. HAWTHORNE. Being sure on any budget projection is not something that any of us can do. So I would first classify it as that, a projection. I think what we've said is, given the current state of operations, maintaining those operations as they currently are, the $59.8 billion is probably the best number that can be derived at this point. I think the real issue that we've tried to emphasize in the report is that there are a number of alternatives in the area of cost savings and other things that we believe could be initiated given the latitude to do so.
Additionally, we also point out in the report that there are some things that the $59.8 billion doesn't take into account which could drive that number even higher.
Mr. COOK. But would it be fair to say that if all of the recommendations that you have made, including the consolidation, were accomplished, it may be a number less than $59 billion?
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Mr. HAWTHORNE. Are you referring to the consolidation of the Tech Center?
Mr. COOK. Well, I'm not sure of every recommendation in the report, but assuming the FAA follows through with every recommendation in the Coopers & Lybrand report from last month, would that imply that the $59 billion is a high number and maybe the deficit projection of $12 billion is high as well?
Mr. HAWTHORNE. I think, first, I would say that some of the recommendations or the areas to give consideration to are mutually exclusive. So you wouldn't say we're going to take all of these items and initiate all of them. Moreover, I think there would be a change in the way the number would come out. I believe within the body of the document there is a table which says if you do this, this is our best estimate of what the cost savings for taking that initiative would be. But I don't think it's feasible to across the board say you're going to do every one of these. Does that answer your question?
Mr. COOK. I think so. I appreciate that.
Could I ask, Mr. Belger, was the report, especially the parts that talk about the lack of a cost accounting system, embarrassing to the FAA, especially in light of the supported the reinstatement of the ticket tax, but I'm concerned about, with the discussions already going on in this committee and in Congress on the need for user fees versus the aviation tax as it is, how long is it going to take to have a cost accounting system? Is it somewhat embarrassing that the FAA doesn't already have a clean bill of health from Coopers & Lybrand on that system?
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Mr. BELGER. Well, no sir, we're not embarrassed at all. The FAA recognized several years ago, frankly, even before we had these very detailed discussions about user fees, that it would be very advantageous to have a much more precise cost accounting system than we have today.
There's a big difference between a cost accounting system in the context that Mr. Hawthorne is talking about and the traditional Government accounting systems that we have. The FAA has perhaps one of the best traditional Government accounting systems in the entire United States Government. I've been told that by several different people both inside and outside the FAA. We know precisely how much money we spend and, within the categories that the accounting system tracks, we know precisely where that money is spent.
The cost accounting system, and I'm no accountant so I'm not an expert in this area, but, as a manager, it would be very, very helpful to know not just how much money we spend in the broad traditional categories of travel and overtime and per diem and things like that, but it would be very helpful to know precisely how much money does it cost to do a particular type of inspection, how much money does it cost to provide a particular type of air traffic service, an en-route service versus a terminal service, and how much does it cost on the East Coast versus the West Coast, and why is it different, so that we can use that type of information for management purposes as well as providing a base for accurately charging users in the future.
So, the fact that the FAA doesn't have a business standard cost accounting system shouldn't be a surprise to anybody in Government. I would venture to say there are very, very few agencies in the United States Government that have a true cost accounting system as compared to the traditional Government accounting system. And those that do are typically those agencies that already are funded in some way through user fees.
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Mr. COOK. Right. Very quickly, in spite of how great the overall Government accounting system is, isn't it true that at least the cost accounting part has to be rectified before we can move to a real serious discussion of whether we move to a user fee versus the existing ticket tax system that we have. Doesn't this have to be taken care of very quickly in the context of what Congress needs to do this year?
Mr. BELGER. Yes, sir, it does. We are in the process of implementing a cost accounting system within the FAA. We will have a base level system in place by October of this year, and hope to be fully, fully throughout the FAA operational with a state-of-the-art business practice cost accounting system by the end of 1998.
Mr. COOK. Thank you.
Mr. DUNCAN. Thank you very much, Mr. Cook.
Ms. Danner?
Ms. DANNER. Thank you, Mr. Chairman.
In light of some of the suggestions such as labor costs, and this is directed at you Mr. Belger, you're still on the hot spot, and increasing productivity, what plans have you all made to restructure your agency so that you can accomplish these goals?
Mr. BELGER. Let me, first, perhaps very briefly mention some of the things that we have already done in the past 2 years and are working on right now, which are not in the Coopers' report, and, quite frankly, this is one of the areas where I wish that perhaps they would have mentioned some of these things. Let me start with the bigger picture.
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The employment in the FAA is approximately 5,000 fewer people than it was in 1992. We have taken those reductions mostly in the non-safety areas. We've tried to, as best we can in these last 4 years where we've had to take cuts, preserve our safety functions. We have, for example, consolidated in our Airways Facilities organization almost half of the field facilities and have established a different structure for the maintenance operation in the field, and we have significantly reduced our cost by doing that.
We have contracted out the operation of the smaller, lowest-level air traffic control towers and have significantly reduced our costs by doing that. This year alone, we have avoided spending about $27 million on the operation of these smaller towers because it is cheaper for a contractor to do it than for us to do it. And so we have done that and we will continue with that effort.
We've taken significant reductions in our administrative and personnel areas, consolidated work functions, re-engineered functions. We're going to continue to do those things in the future. We will be briefing the new Administrator on several ideas we have for the future to continue to do those things.
Ms. DANNER. Thank you. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you, Mrs. Danner.
Mr. Cramer?
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Mr. CRAMER. Thank you, Mr. Chairman. I had to come in late so I missed the oral statements, although I do have the written statements here.
This is really complicated to evaluate an agency this way and to change the way an agency does business. The FAA has so many safety issues that it has to look after, you've got to integrate all of this together. So I want to say that I respect what we're going through. Along that line, there's an indication in here that the 104th Congress gave FAA unprecedented authority to rewrite its own rules. However, that doesn't seem to have saved any money. Can you tell me where we are with that and whether you got far enough along with that process that anything was able to be accomplished?
Mr. BELGER. Yes, sir. As you know, we received that flexibility in April of last year. We immediately put into place a new personnel system. We reduced some tens of thousands of pages of personnel documents down to a document of about fifty pages. There are a number of examples I could go into that tell you how we have shortened the time to do things as a result of not being burdened by all of the old Title V and traditional Government personnel rules. We have not yet been able to quantify all of those savings. But I can tell you intuitively that any time we do something more quickly it does save money, because time is money.
In the acquisition area, I think it is easier to quantify some of the savings. We're working to do that right now. But under the acquisition reform flexibility which you gave us, we have been able to issue contracts in about a third of the time that it took us previously. One of the biggest contracts we've ever let was for replacement of our automation systems in about 180 air traffic terminals throughout the country. We awarded that contract in 6 months and, by the best of circumstances, it would have taken us 18 months under the previous system. And we did it without a protest; there were no protests to the award of that contract. Clearly, that saved significant time.
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All of our major acquisition programs, the replacement of computers in the Centers, replacement of automation systems in the terminals, for example, are on schedule, within their budget. We're in the process now of commissioning new interim computer systems in five very critical Centers, a project that's some 10 months ahead of schedule. And I should say that the legislation requires at a 3-year interval that an outside independent assessment be made of our acquisition reform initiatives. We are also doing an annual assessment right now, as I said, in which we're attempting to quantify some of those benefits.
Mr. CRAMER. Thank you. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you, Mr. Cramer.
Ms. Millender-McDonald?
Ms. MILLENDER-MCDONALD. Good morning, Mr. Chairman, and thank you so much.
Good morning to all of you. I am just getting here myself, but as I'm listening to the questions raised by my colleagues, I suppose I have a couple of questions. One being, Mr. Belger, did I understand you to say that you do not have a type of system that you can compare, like the East Coast versus the West Coast and any other factors that factor into a type of cost accounting document that can allow you to project a budget? Am I correct in hearing you, or was that a mischaracterization of what you said?
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Mr. BELGER. If I could just expand on what you said. We can predict a future budget just like any other Federal agency. But within the rather broad categories of the Government accounting process, we have a very sophisticated forecasting capability in the FAA to predict future trends in air traffic, future trends in passenger enplanements, etc. We base a lot of our future year workload generators on those forecasts.
But what we don't have, for example—if you were a manufacturing organization, you would know precisely how much it cost at the various stages in the manufacturing process and how much it cost to produce whatever the widget is that you're producing when it goes out the door. Well, in the FAA, as in all other agencies practically, we know what it costs to produce that widget, but we don't have the level of precision to know what the various incremental cost elements in producing that ultimate service. For example, let me make a specific FAA example. In the area of safety inspection, we know to the nickel how much money we spend in the safety area—we know how much we spend on salary, travel, et cetera—but we do not have the level of precision to know how much does it cost to do an air carrier inspection, how much does it cost to do an airport inspection, and where are the efficiencies in that.
Ms. MILLENDER-MCDONALD. And are you going to get to that point in your reform?
Mr. BELGER. Yes, we are.
Ms. MILLENDER-MCDONALD. Because I would like to think that is something that you can project. Even though we recognize that budgets are projections, there are certain things that you can do within that construct that can be more precise. And you are trying to get to that?
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Mr. BELGER. Absolutely. That's the cost accounting that we're putting in place now.
Ms. MILLENDER-MCDONALD. Thank you so much.
Mr. Chairman, let me first thank you and the Ranking Member. It's great to be on this committee. This is my first time being here this morning. It's an exciting committee. I was happy to be on the CODEL with the two of you as we went to various States looking at airports. I look forward to being a part of this committee and to further testimony. Thank you.
Mr. DUNCAN. Thank you very much. We were certainly pleased to have you on our visit to various parts of the aviation sector around the country. You contributed greatly on that trip. It's a pleasure to have you on the subcommittee with us, in addition to all the new members that we have.
Mr. Pitts, do you have any questions you'd like to ask?
Mr. PITTS. Yes, just one, Mr. Chairman.
Mr. Belger, many small airports, such as the Lancaster Airport Authority in my district, have difficulty making much needed improvements to facilities to spur economic growth, service capacity. And although the Lancaster Airport Authority operation expenses do not require Federal, State, or local subsidies, their revenue is only about $10,000-$15,000 annually. It is certainly not enough money to extend the runway, to make other important improvements. They simply do not serve enough passengers that PFCs would fund airport needed improvements. In light of this study, our critical examination of the FAA, our waning airport improvement fund, do you have any suggestions? What do you see as the long-term solution for small airports?
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Mr. BELGER. There is no doubt that it is more difficult for the smaller airports to generate revenue from these various outside sources than it is for the larger airports. I would like to answer your question by saying that this is a particular area where the National Civil Aviation Review Commission has been asked specifically to looked at. We would expect that the Commission, using this report prepared by Coopers & Lybrand and other recommendations and input from a variety of different people, will specifically address that. It might be better to wait and see what their recommendations are in the September timeframe.
Mr. PITTS. September of this year?
Mr. BELGER. Yes, sir, of this year.
Mr. PITTS. Okay. Thank you.
Mr. DUNCAN. Thank you very much, Mr. Pitts.
Another member who has just joined the subcommittee and is here for the first time is Mr. Davis.
Mr. Davis, we want to welcome you also. Do you have any questions or comments at this time?
Mr. DAVIS. I'll just be brief. I noticed that the Coopers & Lybrand report talks about a wave of retirements with the FAA technicians. I just want to know if anybody knows how many technicians are eligible to retire between this fiscal year and fiscal year 2002? Do you have any specific numbers on that?
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Mr. BELGER. I can provide that for the record. I can tell you that this past year, just as a historical point of reference, and I will provide that specifically, there were about 220-some retirements in our maintenance workforce out of an eligibility of a little over 1,000 I think that were actually eligible.
We're predicting for the next several years that the retirement will be about 20 percent of the eligible to retire. I just don't have the exact number available, but I will provide that.
[The information received follows:]
[Insert here.]
Mr. DAVIS. Okay. Thank you. That's all, Mr. Chairman. I yield back.
Mr. DUNCAN. Thank you very much, Mr. Davis.
Ms. Granger?
Ms. GRANGER. Thank you very much. I have no questions at this time.
Mr. DUNCAN. All right. Thank you very much.
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Mr. Poshard?
Mr. POSHARD. Thank you, Mr. Chairman. I have no questions at this time. But I would ask unanimous consent to submit an opening statement for the record.
Mr. DUNCAN. Without objection, your statement will be placed in the record. Thank you very much.
[Mr. Poshard's prepared statement follows:]
[Insert here.]
Mr. DUNCAN. Mr. Lipinski?
Mr. LIPINSKI. Thank you, Mr. Chairman.
A question for Mr. Hawthorne. Do you have any idea how the FAA manages its money in comparison to other Federal Government agencies?
Mr. HAWTHORNE. Well, I think we made the comment in the report that while the statements were made by numerous people at the FAA that they have problems in managing money, that's not unusual in the Federal sector. The incentives for what would be prudent money management are ill-placed in Government accounting in the way that the Federal sector operates. So, I can't really comment with any specificity there. I would say I don't think they're any worse than any of the other Federal agencies we've looked at.
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Mr. LIPINSKI. You talk about consolidating a number of facilities throughout the country, and that's been brought up a couple of times already this morning. We had a Senator and a Member of Congress here already testifying about the uniqueness of their particular facility. We have to think about politics in regards to all of these things also. We would like to operate in a vacuum, pristine, but that's not really possible.
Is it your judgement that your report has taken into consideration the political realities when you talk about the consolidating of facilities?
Mr. HAWTHORNE. I would have to answer in the negative there. We take the position of looking at it from a hard economic standpoint. We've all been in Washington a long time. We understand the political aspects of those. But that's not really our role or out job to evaluate the political aspects of closing a facility. So, no, that's not included in our report.
Mr. LIPINSKI. It just seems to me that we would be better off when we had these studies if we would take in all aspects of what it's going to take to accomplish certain factors. That may very well not have been your charge, but I think we here in Congress should certainly expect, when we give out a mandate to someone to conduct a study, they should take in the full range of what is really politically feasible and what is not, because I think we sometimes get a false understanding of what can possibly be done if we don't have the political realities stated for us also.
In regards to the air traffic controllers, it is my impression from your report that you were saying that we can either reduce the number of air traffic controllers or reduce the compensation of the air traffic controllers. Is my impression correct?
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Mr. HAWTHORNE. In a general sense, yes. I think what you have to do is to really look at this and put it in perspective. When you look at the FAA and its budget, roughly 75 cents out of every $1 is spent by way of personnel costs. Once you break that 75 cents down as to where it is going, the portion which is going toward administrative type functions is minuscule. So it is safe to say that 74 cents of the 75 cents is going toward operation. Further breaking that down, I think it's pretty safe to say—and some of my colleagues here can probably correct me if I'm off a few cents—that roughly 60 to 65 cents out of that 74 cents remaining is going toward air traffic control.
So if there is any place——
Mr. LIPINSKI. Going towards the salaries of air traffic controllers, 60 to 65 percent?
Mr. HAWTHORNE. Air traffic control and benefit, yes.
Mr. LIPINSKI. Of the 75 percent that goes for personnel?
Mr. HAWTHORNE. Right. So if there are any headway to be made by way of cost savings, that's where you have to look. It is just not in the other areas in our opinion to make significant headway there.
Mr. LIPINSKI. Once again, I would say that may very well be true in your pointing that out, but we have differential pay at the various locations throughout this country and there was a move last year or the year before, I don't remember exactly when that was, to level off the pay of all the air traffic controllers. That went absolutely no place. So, once again, we run into the political reality. That may be 60 to 65 percent of the 75 percent of the budget out of the FAA that goes for personnel but I find it difficult to believe that we are going to be able to make any real substantial savings in that area.
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It seems to me that since they have probably the most direct connections with safety, it would seem to me that we may very well be expanding air traffic controllers in the future, particularly if the predictions of the increase in travel come to pass. I just feel that to say that we can make savings in that area in this report is simply saying that's the biggest area so go after that. But in reality, I don't think it's going to be feasible to do so. Do you have any comment in regards to my comment about your report?
Mr. HAWTHORNE. Very briefly, and I'd like to give some of the other folks here an opportunity to make comment on that. When looking at the pay, one of the things that I think is fairly significant there is the 5 percent special pay provision that was enacted back in 1981 as a result of the air traffic controllers strike. That was put in place to enhance people to come back in as air traffic controllers. Not only is it still here 16 years later, it has broadened beyond air traffic control. We can't come down and make a conclusion that there are real things that can be done here. What we have stated within the body of the report is that these are things that should be looked at.
I would like to ask Mr. Kasper to comment further.
Mr. KINGHORN. Before Dan speaks, that goes back to the heart of the purpose of the assessment. The way we approached it was to look at the base budget where you start with $8.6 billion. We understood the difficulties of doing much with that base because FAA has tried and you have probably tried. But the point was that if you look at these complex issues, like pay, and are unwilling to make adjustments certainly for the future, you might have to grandfather things, but if you don't change this progression of cost increases that have occurred, whether they're mandatory pay increases required by Congress and every Administration, whether it is inflation that's sort of a mandatory cost, if you don't change that dynamic, that's why we said that given current operations, the number is a reasonable number.
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What we would say on personnel, and we do say in the chart, is that FAA is going through major negotiations over the next year on pay for the future, they have broad pay reform responsibilities and authorities, and what we're suggesting is that they look at pay in a comprehensive fashion so that perhaps you don't grow up over the years with 36 special pay categories totalling a quarter of a billion dollars that may or may not make sense for the future. So that's the real issue. We're really pointing toward the next 5 to 10 years. That if you're going to go into negotiation on pay that will effect you for the next 5 years, bring that whole picture together and deal with it comprehensively.
Mr. LIPINSKI. Thank you.
Mr. Chairman, I don't know if this panel is going to be here or not after the vote. If they are, I would like to ask them some questions. But if they're not, I want to give you an opportunity to question them.
Mr. DUNCAN. I have several questions and Mr. Blunt has some questions. So we're going to break at this point and go vote. We will keep this break as short as possible and we'll try to be back in about six or seven minutes. Thank you.
[Recess.]
Mr. DUNCAN. The subcommittee will come to order.
I have a number of questions. But first I want to go to Mr. Blunt. I believe that Mr. Blunt has some questions.
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Mr. BLUNT. Thank you, Mr. Chairman.
First of all, I would like to start, Mr. Hawthorne, on your side of the table. You indicated in your report that many FAA executives told you that the FAA can't manage money. I wonder if you could give me some specific examples of money mismanagement that you found in the audit.
Mr. HAWTHORNE. I don't believe that we've said that money has been mismanaged. I believe, and I'd have to look back in the report, that that's a quote that we took——
Mr. BLUNT. It is a quote. I wondered if you had found any examples of that.
Mr. HAWTHORNE. I would ask Mr. Kinghorn to address that.
Mr. KINGHORN. I think the issue here for FAA, as well as other Federal agencies, is their ability to move away from traditional Federal budgeting, which, again, it was alluded to earlier, is based essentially on inputs—travel money, salary money. Most financial systems in the Federal Government provide that information. For a manager in the field, whether it is FAA, whether it's Custom Service, whether it's Immigration and Naturalization, that information which is traditional accounting and budget information is not particularly useful.
What we are saying here, and the context in which those statements were made, is that FAA does not have a cost accounting system that will tell a manger the costs of his or her activities—how much is it costing me in Oklahoma to deliver this service to the airlines, for instance. That's where we heard the comment saying FAA does not know how to manage money in that way.
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The issues of cost accounting are evolving, as you know. The managerial cost accounting standards, which are the first Federal cost accounting standards, only were published 5 months ago. They system standards which are now coming out of the Joint Financial Management Improvement Program are in draft. So this is an evolving issue throughout the Federal Government. The issue of cost management and money management was really a look toward the future in the comments that were given us, that until an agency such as the FAA, or any other Federal agency, knows the full costs of the activities that it is performing, it really can't manage costs. That's not to say they don't know how much they're spending or obligating, they know that reasonably well.
The other issue that was alluded to in the same context is most of the agencies in the Federal Government we work with who are in advance of the wave, doing the most modern things, are organizations that have either revolving funds or have fee mechanisms. The fee mechanisms are a driving force for people to manage money differently. So I think that is an important factor.
Mr. BLUNT. So you really didn't find money mismanagement. That comment doesn't indicate that there were great examples of mismanagement, but just simply the organization is not adapted yet to concepts that would be common in private sector management?
Mr. HAWTHORNE. I think that summarized it well. I would agree.
Mr. BLUNT. In terms of the pay scales, whenever we started this pay differential in 1981, now there are 36 categories. How many categories were there when it started of employees that would benefit from that pay differential?
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Mr. HAWTHORNE. I don't have that information. We know, obviously, there are 36 today. Mr. Belger may know what there were.
Mr. BLUNT. Mr. Belger, do you know? Did it start with just the air traffic controllers and we've added a number of groups since then? How did that build up?
Mr. BELGER. I think that reference to 36, and you can correct me if I'm wrong, different pay categories is FAA-wide, not just in the air traffic controller workforce. When the Air Traffic Recovery Act was passed back in early 1982, I guess it was, which set up this pay system for the air traffic controllers, it at that time included other occupations also. There have been no new occupations added to that since 1981.
Mr. BLUNT. Okay. So we're still dealing with the same occupations that got the differentiation that we did initially?
Mr. BELGER. Yes, sir.
Mr. BLUNT. We haven't added to that over the years?
Mr. BELGER. No, sir. No occupational group has been added to that system at all.
Mr. BLUNT. Okay. That's helpful.
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In the audit, back to the issue of combining the Technical Center in New Jersey with the Center in Oklahoma, give me some audit rationale for that from the audit side.
Mr. HAWTHORNE. First, let me clearly state this was not an audit. We performed no audit functions.
Mr. BLUNT. Okay. From the management side then.
Mr. HAWTHORNE. Let me address the Tech Center. A great deal of the discussion that we've heard over the past weeks and even here this morning relate to the first draft of our report, which Mr. Belger could certainly attest, we pulled together this first draft in a very rapid fashion. My direction to the people drafting that report at that time were I need you to think beyond the bounds, outside of the box, if you will, and put stuff in here that may not in the end make a lot of sense.
In that vein, we submitted this draft to a restricted number of personnel at the FAA to get feedback on it and, especially, if we have something factually incorrect in our report, we need to know that. So that's from whence this whole issue has arisen about our recommendation to close the Tech Center in New Jersey. If you read our report now, what it simply says is that this operation costs $375 million a year, it only makes sense to look at it from a cost-benefit analysis to see are you really getting that kind of benefit out of it, and is there a better, faster, easier way of accomplishing the same thing.
The discussions relative to the types of activities that it performs, we have in no way said that those activities don't need to be performed. I know it has been said a number of times we've recommended the consolidation. We haven't recommended that at all. Everyone, in an effort to downsize Government and operate in a better, more efficient fashion, has taken on the role of looking at operations like this to see is there a more efficient way of doing it. That's simply all we've made the recommendation on.
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Mr. BLUNT. In your first draft, were you a little stronger in the recommendation?
Mr. HAWTHORNE. Absolutely.
Mr. BLUNT. Okay. So you've backed away from that first draft after you received comments——
Mr. HAWTHORNE. Basically, all of the comments that you heard have related to what was in that first draft. We've been through I believe five drafts since then, and I think the bulk of that was struck after the first draft.
Mr. BLUNT. Mr. Belger, are you going to continue some evaluation of that area of the report, or is that settled as far as you're concerned?
Mr. BELGER. We have no plans to do any large-scale review. We're obviously going to look, as he's suggested, look at the ongoing benefit-cost of all of our facilities. But we don't plan any major study to look at the potential closing of the Tech Center.
Mr. BLUNT. What kind of cost-benefit mechanism have you put in place to evaluate your facilities?
Mr. BELGER. When we get the cost accounting system in place, we will be able to know, for example—let me use the air traffic analogy for this—we will be able to know whether the services provided by one air traffic control tower are reasonably close in cost to those identical services provided by another air traffic control tower. So we will have the wherewithal to make those types of judgements.
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Mr. BLUNT. And what's your goal in getting those in place?
Mr. BELGER. Fully operational throughout the FAA by the end of 1998. We'll have about four systems in place by the end of this year.
Mr. BLUNT. Mr. Chairman, I think that's all I have right now. Thank you.
Mr. DUNCAN. Thank you very much.
Mr. Hutchinson, do you have any questions at this point?
Mr. HUTCHINSON. Mr. Hawthorne, in regard to the report, I was looking at it and it indicated that it supported, I think the language of the report is that you examined in some detail the recent draft of the Gellman Research Associates cost allocation study and ''We conclude the results of the draft Gellman study provides an acceptable interim basis for attributing costs to broad categories of users.'' In your opinion, does this study indicate that this would be a good starting point for switching to a user fee system to fund the FAA?
Mr. HAWTHORNE. I believe that's what we've said in the report, that it is a reasonable manner to use on an interim basis. Again, this is an issue that's received a great deal of conversation. Let me try to clarify, if I might, just a bit of that. The ultimate goal here is to get down to a cost allocation system based on a true cost accounting system, which Mr. Kinghorn has rightfully pointed out, they don't have that at this point. Even before we came in they were working on putting their cost accounting system into place. Once completed, they will be able to really tell exactly what it costs to perform a certain function.
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Now, once you go through that process and get into a situation where you're now allocating those costs out to user groups, you will have a pretty good method of allocating cost based on who ultimately benefits from those costs. However, any cost allocation system that you use is arbitrary in nature. In the end analysis, if today you use the Gellman research study to allocate cost and it results, let's say just as an example, that user A is allocated $2 of cost, once you get to the full cost accounting system, you are still dealing with the vagrancy of an arbitrary allocation system. You might refine that to it is not $2, it's only $1.95. However, I would be quite surprised if it is going to turn out to be a $1 at that point. You're not going to cut it in half.
The intricacy and the way the FAA operates is so interwoven that while it needs to get to a cost allocation based on cost accounting standards, that shouldn't forestall the implementation of a user fee if that's where they're headed in the ultimate analysis.
Mr. HUTCHINSON. Are you saying—I want to know how to get from point A to point B. I know that there are the politics of it, but if you just look at it from a fairness and a cost allocation procedure, how do you adopt a more fair system of allocating the costs of the FAA. You're indicating the first step is to get a cost accounting system in the FAA; is that correct?
Mr. HAWTHORNE. That's right.
Mr. HUTCHINSON. But then you're saying once you get that, you're still going to have an arbitrary allocation of costs?
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Mr. HAWTHORNE. There is always going to be a certain level of costs that wind up where you just say there's no way that I can really allocate this to a specific activity. Let me take this to another type of activity to, for instance, a manufacturing corporation. Obviously, if you've got people on the line who are building the widget, their cost is actually from a cost accounting basis part of the cost of producing that widget. But how do you deal with the president of that company's cost? Where does his money, the money that's paid to administration wind up? You wind up with an arbitrary allocation of those numbers out to a best guess.
Mr. HUTCHINSON. That's standard in accounting though to allocate the administrative costs. There's nothing unusual about that.
Mr. HAWTHORNE. No. No. But it is still an arbitrary allocation.
Mr. HUTCHINSON. But there's nothing unique about the FAA that prevents a cost accounting system being in place that would help us to reach the point to know what is a fair allocation of the user fees. Is that correct?
Mr. KASPER. Yes, Mr. Hutchinson, I believe that's fundamentally correct. There is one other issue though which I think probably should be put on the table, and that is the nature of the air traffic control system is a very large-scale network and networks have in them inherently typically a fairly sizeable percentage of the costs that are common costs, sort of like administration except in a network case probably a substantially higher percentage. So the result of the arbitrary allocation methodology that Mr. Hawthorne referred to is more significant in the case of a network industry or network services like air traffic control than it would be, for example, in a simple manufacturing operations. That is really where the Gellman analysis comes in and our review of it.
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Mr. HUTCHINSON. My time has expired. I want to thank the Chairman for these hearings. I really hope that we can keep some momentum going to have a more fair allocation of that user fee. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you very much, Mr. Hutchinson.
Mr. Belger, not speaking specifically about the FAA, but I've noticed over the years that there is almost nothing that a Federal agency is more sensitive about or gets more upset about than somebody saying that it is over-staffed. Yet, Vice President Gore, when he started his reinventing Government program, said that the Federal Government was over-staffed to the extent of about 250,000 employees, in fact, I think he has 252,000.
The report says at one point that the staffing standards used by the FAA in projecting its staffing needs for over 80 percent of its workforce are outdated and deficient. Moreover, the standards for ATCs consistently over-staff facilities during non-peak periods. There are other similar comments in this report. It basically says that the FAA has been historically over-staffed. How do you respond to that, first of all?
Secondly, you said earlier that you have decreased the number of employees at the FAA by 5,000 over the last few months or last 2 or 3 years. Has there been an actual reduction or do we just have 5,000 employees doing that work for private contractors now? That's the second question.
The third question is, what is the FAA doing to offset its increased labor costs by increased or enhanced productivity?
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I've asked you three pretty tough questions there. I guess it might take a while, but let me see how you respond.
Mr. BELGER. Thank you. The staffing was the context of the first question. I guess I must say that I don't agree with the conclusions that the report came to in terms of widespread over-staffing in the FAA.
The report went on to criticize the staffing standards. The staffing standards in the air traffic area, which is the largest workforce of the FAA, are constantly updated. We've just completed a review within the last year or so of the staffing standards for our air traffic control centers. We've had in the past I think it's 2 years, but I'll say three just to be accurate, very, very qualified world-renowned industrial staffing standards experts come in and look at our staffing standards. They are currently under review by the National Academy of Sciences which is going to give a report to us next month. So, can we improve the staffing standards? Absolutely. We always can improve. But I don't accept the conclusion that they're way out of date and don't give us a good clue of what our staffing needs are because I think they do.
We recognize the shortfalls in our staffing standards. We know they are more accurate on the national aggregate level than they are at the specific facility level and we try to compensate for that. But we're working constantly, not only in the air traffic area, but in the safety and security area to improve our staffing standards and ensure that we've got accurate ways to project our workload for the future.
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The second question you asked had to do with our staffing reductions and, really, the question that we get asked a lot, are we reducing Government employees and having that work being picked up by contractors and, therefore, not saving any money in the course of doing that. That's not true. Has some work been picked up by contractors? Absolutely.
Let me use an example which I think is a good example, and this is referenced in the Coopers & Lybrand report. We have for several years been contracting out low-activity air traffic control towers to be operated by private industry. We have given the controllers at those facilities the option of going to work for the contractor or staying with the FAA. Without going into a lot of detail, up to this point we've contracted out about 800 jobs. There have not been 800 contract personnel come in to replace those 800 air traffic controllers; it's been a much smaller number because, quite frankly, of work rules, the ability to reduce hours and so forth, contractors can do it with fewer people. But even if—and this is the point I want to make—even if it was a one-for-one exchange of bodies, the costs are significantly cheaper for the contractor to do this work than for the Government to do it. In the case of the contract tower programs, we have avoided spending some $27 million by doing that.
Are there some cases where there is a one-for-one contractor doing the work of the FAA? Yes. But the rules are, and I sure hope we're following these rules, that it has to be cheaper for the contractor to do the work.
Your third question was in the area of productivity, which is certainly going to be a major focal point for the FAA of the future. We cannot survive in today's budget world without improving our productivity significantly. In the air traffic area, in the maintenance/technician area, in the safety area, in the security area, I think all the data shows that our productivity has improved significantly in the past few years. If you look at data which is very readily available, it shows, for example, the number of operations per controller, you see a significant, steady increase in the number of operations per controller. If you look at the number of systems maintained by the typical maintenance inspector, you see a significant and steady increase in the number of systems and pieces of equipment maintained per technician. So there are a lot of factors that I believe in my look at this every day where our productivity has improved.
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But we're going to have to look at ways to improve it even more. Some of the automation tools that we're putting in to help our safety inspectors are going to significantly improve productivity. The same is going to happen in several years after we replace the infrastructure in our air traffic control area and start putting in some new software programs to improve their productivity.
I wanted to go back to point two and make one point about staffing, and it is related to productivity. We need to be very candid when we're talking about this. The fact is that the President's budget, which we fully support, for 1998 is calling for an increase in the number of safety inspectors, the number of security inspectors, the number of air traffic controller, and the number of maintenance technicians. We think that is appropriate based upon the workload generators that we're looking at, based upon increase in air traffic operations, based on new equipment that is going to be coming into the air traffic arena, and based on all the training that is going to be required to operate those systems.
So, on the one hand, we have to be more productive, but, on the other hand, it's clear that I think the public demands, and the President's budget is requesting, an increase in some of these work forces. We've got to find ways to be as efficient as we can and also look at the other non-safety work areas to be as efficient as we can in those areas, too.
Long answer, I apologize.
Mr. DUNCAN. That's all right. Let me ask you, what do you think about the report's statement that you could save almost a half a billion dollars on the special pay provisions?
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Mr. BELGER. Well, several points. That might be a factual statement but it's not realistic to achieve I do not believe. Number one, there's current legislation, which again the FAA fully supported, which prohibits the FAA or the Administrator from negatively impacting pay until 1999, at the earliest. That was passed in last year's reauthorization.
The second point is the incentive pay which was provided by the Congress back in 1982 was more than just pay to try to motivate controllers to come back to work. It was much more than that. It was a recognition of a negotiated package that was about to be agreed to, more pay for air traffic controllers, and it was also a recognition of the vital and significant role that they play in providing a safe transportation system. So it has over the past 16 years become an inherent part of our pay system.
Now, we are looking at a new classification system for air traffic controllers which will result in a new compensation system as a part of our personnel reform initiatives. And in doing that, we will look at all these peripheral incentive types of pay systems and try to incorporate those into one straightforward basic compensation system for all of our employees.
Mr. DUNCAN. Mr. Hawthorne, let me ask you or your associates, you have an additional very large savings recommendation, $310 million, based on management and acquisition reform. Can you explain more specifically about how you came up with that specific figure and what all it entails?
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Mr. HAWTHORNE. I'm going to ask Ms. Smith to respond to that.
Ms. SMITH. The information with regard to management reforms that had to do with acquisition and personnel, the numbers were provided to us by the FAA. They have had a number of work groups involved in looking at the personnel reform and acquisition reform issues over the past year to try to determine what the savings could be. So the numbers that we've presented are basically the ones that they've developed out of their work groups.
Mr. DUNCAN. So that's not something you came up with, that's something the FAA came up with?
Ms. SMITH. Yes, they developed those.
Mr. DUNCAN. What about the $116 million for the new computer system for personnel and payroll. That's a very specific figure. Is that once again a FAA-provided figure?
Ms. SMITH. Yes, it is. That's their estimate for cost of implementing personnel reform.
Mr. DUNCAN. Let me ask you this, I know that there are very, very few corporations in this country that are $8 or $9 billion corporations but Coopers & Lybrand does do work for some of the largest corporations in this country. How would you say the FAA compares to these very large corporations of a similar size?
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Ms. SMITH. With regard to the reform issues?
Mr. DUNCAN. Overall. Just overall. Do we have an efficient, well-managed, well-run corporation here if the FAA was a private corporation, or is this a corporation that the stockholders should be really upset about? We're representative of the stockholders of the country, the Government.
Ms. SMITH. Right. I think we've tried to identify those areas that we believe that you should be looking at with regard to management reform. Some of the areas that we think are particularly of concern are productivity improvements. We've said that if the FAA continues to operate as it is, their costs will not be declining but the costs will indeed be increasing, because there are additional mandates that are out there that they will have to address.
So we believe that one of the key areas, and this is an issue that major corporations across the country are dealing with, is productivity improvement—re-engineering their operations, not doing things the same way that they've done them in the past. So we've tried to identify and highlight those areas that you can look at with potential savings.
Mr. DUNCAN. If one of you took over the FAA today and you could do anything you wanted to do, what would be the first big step that you would take?
Mr. HAWTHORNE. Let me see if I can address that in a very broad sense, and I think Ms. Smith has addressed it somewhat. The place that I would drop back to, if placed in that position, is to first answer the question, why does the FAA exist? Then start looking at each and every operation that goes on there, every process as how does that move us toward achieving that goal of answering the question why does the FAA exist.
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It is not unique to the FAA nor to Government, it happens in the private sector as well that organizations grow and become unwieldy over the years. The best way to rethink that operation is to drop all the way back to ground zero and attack it from a strategic goals and objectives viewpoint, asking those questions why are we here, what are we trying to accomplish, and then looking at everything that they're doing as how does that achieve that overall objective. The buzz word today is BPR, business process re-engineering, and undertaking that; however, those of us that have been around a number of years, have done this under a number of different names over the years, it's basically realigning an organization with its strategic goals and objectives. That's where I would start.
Mr. DUNCAN. Your report, Mr. Hawthorne, says the FAA does not have solid information on the full costs of its services and operations. You've heard Mr. Belger at the very first say that the FAA is going to have a new cost accounting system in place by October. Are you familiar with what they're talking about putting in place? And do you think that's going to be adequate to remedy this problem?
Mr. HAWTHORNE. I don't believe that we've looked at the details of their cost accounting system as it's envisioned. I think that was beyond the scope of what we were asked to do. We took it as a generic cost accounting system which would answer the basic questions of what it costs to perform certain functions and services.
Mr. DUNCAN. On this very specific statement about the ATCs consistently over-staff the facilities during non-peak periods, can you give me any specific examples of that? Are there any particular places where there is horrible over-staffing? We hear about some places maybe being under-staffed. Are some being over-staffed? What can you tell us in that regard?
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Mr. HAWTHORNE. Again, I'm going to ask some of my colleagues to comment on this. But, generally, I believe the staffing standard that is used for air traffic controllers is to take the 37th busiest day of the year and staff to meet that demand. That obviously results in 300-some days of the year when you're over-staffed.
Carolyn, could you comment please.
Ms. SMITH. Certainly. What we were trying to highlight in looking at the staffing standards were basically two points. The first point being that in developing the standards, there was no attempt to refine the way the activity was being performed. In other words, the staffing standards simply captured the way the activity is currently being performed without regard to whether or not that is the most effective way to do it.
The second point was that indeed the staffing standard is built on the 37th busiest day of the year, which would cause peaks and valleys to occur throughout the day, but if you're staffing at the busiest period of time, then you would have some time during the day when people were not fully utilized.
You asked for examples. When we interviewed various people, we were told, though we did not go to Miami, that Miami was an example of where there was indeed over-staffing in the air traffic control area and that there were other areas throughout the country where there was under-staffing. Some of this was brought about because of the way the standards were developed as well as the way boundaries were drawn across the country in terms of the activity or the space that was set aside for air traffic control.
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Mr. DUNCAN. Mr. Belger, I have already been told by some people at the FAA that there is really nothing new in this report. I think I understood you a while ago to say that there's not any real drastic actions that you're getting ready to take, I don't know if that's exactly the way you put it. I actually had one man yesterday who told me that he felt this report sounded like just a compilation of a bunch of paragraphs taken out of all of the previous studies that have been done. What do you think about that?
Mr. BELGER. Two thoughts; one general, and one more specific. The charge to Coopers & Lybrand was not to necessarily produce a series of recommendations for the FAA, but to lay the ground work for the National Civil Aviation Review Commission and to specifically assess whether or not the requirements that the FAA had been talking about for the past 2 years were in the ballpark, and suggest other things that perhaps we could do. And they did that. So in that regard, I think the report is right on target. I think it does lay a good framework for the Commission to use as a basis.
In the area of those types of things that we're talking about right now, the potential cost savings, I think, as the report acknowledges, none of those are new. Everyone of those has been to some extent looked at, considered by the FAA and many of them discussed and actually proposed in the past. So there were no new ideas necessarily in that area that talks about potential cost savings or reductions for the future.
Mr. DUNCAN. All right.
Mr. Lipinski, do you have further questions?
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Mr. LIPINSKI. Thank you, Mr. Chairman.
I would like to get back to the cost allocation system. If, indeed, we move towards a user fee to replace the ticket tax and the other taxes that exist at the present time to fund the FAA, it is my understanding, Mr. Hawthorne, and then I'm going to ask the FAA also, but it is my understanding based upon what you and the other members from your side have said is that no matter what cost allocation system we move to, it is going to be somewhat arbitrary. Is that correct?
Mr. HAWTHORNE. That is correct. I don't think you can ever get it down to an exact science.
Mr. LIPINSKI. Mr. Belger, do you agree with that assessment of a cost allocation system?
Mr. BELGER. Yes, sir, I do agree that there will always be elements of subjectivity. Absolutely.
Mr. LIPINSKI. Now, is the FAA, and I think so but I'm not sure and so I'll ask you directly, are you working on in the near future a cost allocation system that would be utilized in implementing a user fee?
Mr. BELGER. The cost allocation system that we are working on, which will be basically a commercial off-the-shelf system, will provide the basis for more precise allocation of costs than we have today and, therefore, provide a more precise base for user fees in the future, if that's the way we decide to go.
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Mr. LIPINSKI. Do you have any idea when you would be in a position to give to this committee an arbitrary cost allocation system that could help us determine a user fee that we might implement?
Mr. BELGER. Yes, sir. Let me answer that in two ways. First, and again I will refer back to the Coopers' assessment, is that the existing cost allocation capability that we have that is reflected in the Gellman report is an adequate basis to begin the user fee process. That report will be finalized and available next week. In my view, it is the best we can do today, given our ability to track precisely unit costs, of an allocation of cost to the various users of the system. When we get the overall cost accounting system, we will just have an ability to do that much more precisely.
Mr. LIPINSKI. Could you give me a date when you might be able to give me what you think is the best cost allocation system data?
Mr. BELGER. Let me ask Mr. Verburg. He's individually responsible for that and we're working on getting that report finalized.
Mr. VERBURG. Good question. We have worked on what's thought of as the Gellman report over the last year. That report is available to be issued in final next week. So we're prepared to do that. That's the cost allocation part of it that you're referring to.
The cost accounting system which will follow, we issued a request for offer this Wednesday. We've had Arthur Anderson helping us with the requirements for that system. We're planning on rolling it out this October to four different locations within the FAA. We've had organizations step forward saying they are interested in doing this. We're taking those first. Once we've tested it, done the piloting, and gotten all the kinks out, if you will, we plan on rolling it out through the rest of the organization so by October 1, 1998, we have a full cost accounting system across the FAA.
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So we have two deadlines that we're working toward. One is October 1st of this year to have our four locations within the FAA actually working on this system, and then in October 1998 we will have a full roll-out. We'll take the course of that year to roll it out throughout the organization.
Mr. LIPINSKI. So you would be able to give me the information that I'm interested in obtaining in October of 1998?
Mr. BELGER. Two milestones, to answer your question. Next week the finalization of the current cost allocation study, the Gellman study which was reviewed by Coopers, that will be finalized and public. It does assess costs to users. It is adequate for today's user fee proposals that we're working on. The more precise cost accounting system, as Mr. Verburg said, the end of 1998.
Mr. LIPINSKI. If I were going to design a user fee system to fund the FAA, next week when this report comes out, would I have enough information to go ahead and do that?
Mr. BELGER. Yes, sir. Now, some would argue as to whether or not it is precise enough. But my answer is, yes, I believe you would.
Mr. LIPINSKI. But we've already established from your mouth and from Mr. Hawthorne's mouth that no matter what we go into, it is going to be somewhat arbitrary, correct?
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Mr. BELGER. You're right. Yes, sir, you're exactly right.
Mr. LIPINSKI. Mr. Hawthorne, I have a question for you. In your experience, does the Defense Department programs and management get the type of scrutiny that the FAA receives?
Mr. HAWTHORNE. Since none of the people here work on DOD contracts, I don't know that we can answer that question.
Mr. LIPINSKI. That's twice now, Mr. Hawthorne, I've tried to get you to put in a good word for the way the FAA has operated and I haven't been able to get you to do so.
Mr. HAWTHORNE. They're doing a marvelous job, sir.
[Laughter.]
Mr. LIPINSKI. Thank you. That's exactly what I've been trying to get out of you with those two questions.
With that, Mr. Chairman, I yield back the balance of my time.
Mr. DUNCAN. All right. Thank you very much.
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Mr. Costello?
Mr. COSTELLO. Just a couple of questions, Mr. Chairman, for the FAA.
The first question relates to the year 2000 problem. What is the cost and scope of fixing the problem, and what is the status of fixing the 2000 problem?
Mr. BELGER. It is potentially a major problem for us, I want to reemphasize, potentially a major problem. We are working aggressively to try to understand precisely what the fixes are and what the costs will be. I can't give you an exact cost yet because we don't know. As you might suspect, we have an enormous number of computer systems both operational and administrative that we rely on every day, not the least of which is the air traffic control computer system. But we're working on that as quickly as we can. I can assure you, as soon as we know, we're going to make that public. But we just don't know yet the magnitude of the fixes nor the precise cost.
Mr. COSTELLO. Do you think that the FAA got its money's worth out of the Coopers study?
Mr. BELGER. Yes, sir.
Mr. COSTELLO. I guess, for Mr. Hawthorne, the question is, do you believe that the 90-day period was an adequate period of time to do your job?
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Mr. HAWTHORNE. Based on the definition of the job, it was certainly taxing. We had many people working some very, very long hours on this. I think the question really has to be put in relative terms: Could a much better job be done over a 5-year period? Absolutely. Could a better job be done over a 120 days? Absolutely. But given the charge that we had and the exigency of the situation, as long as the ultimate user of the document understands what it is, I think it was satisfactory.
Mr. COSTELLO. Mr. Chairman, thank you.
Mr. DUNCAN. Thank you very much, Mr. Costello.
Mr. Ehlers?
Mr. EHLERS. Mr. Chairman, I apologize, I'm bouncing between two hearings and I don't feel I've been here long enough to ask an intelligent question. I'm not in the habit of displaying my lack of intelligence, so I will yield back the time. Thank you.
Mr. DUNCAN. That's all right. Thank you very much.
Gentlemen and Ms. Smith, thank you very much for being with us. You've been very helpful witnesses here this morning. There are some members who have submitted questions for the record and we will ask that you respond to those questions in writing for the final report from this hearing.
[The information to be supplied follows:]
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[Insert here.]
Mr. DUNCAN. We will now call up the second panel at this time.
Our second panel consists of Mr. Joe Fruscella, who is the Eastern Region Vice President for the National Air Traffic Controllers Association; Mr. Thomas B. Chapman, who is the Senior Vice President of the Aircraft Owners and Pilots Association; Mr. Edward A. Merlis, who is the Senior Vice President for Government Affairs of the Air Transport Association of America; Mr. David Z. Plavin, who is President of the Airports Council International of North America; and Mr. Robert E. Robeson, Jr., who is the Vice President of Civil Aviation for the Aerospace Industries Association of America.
Gentlemen, thank you very much for being with us. I suppose the fairest way to do this is just to proceed in the order as listed here on the witness list. So that means, Mr. Fruscella, we would start with you. Would you please present your testimony at this time.
TESTIMONY OF JOE FRUSCELLA, EASTERN REGION VICE PRESIDENT, NATIONAL AIR TRAFFIC CONTROLLERS ASSOCIATION; THOMAS B. CHAPMAN, SENIOR VICE PRESIDENT, AIRCRAFT OWNERS AND PILOTS ASSOCIATION LEGISLATIVE ACTION; EDWARD A. MERLIS, SENIOR VICE PRESIDENT, GOVERNMENT AFFAIRS, AIR TRANSPORT ASSOCIATION OF AMERICA; DAVID Z. PLAVIN, PRESIDENT AIRPORTS COUNCIL INTERNATIONAL-NORTH AMERICA, ON BEHALF OF AIRPORTS COUNCIL INTERNATIONAL, NORTH AMERICA AND AMERICAN ASSOCIATION OF AIRPORT EXECUTIVES; AND ROBERT E. ROBESON, JR., VICE PRESIDENT, CIVIL AVIATION, AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA, INC.
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Mr. FRUSCELLA. Thank you. Chairman Duncan and members of the subcommittee, I am Joseph S. Fruscella, Eastern Region Vice President of the National Air Traffic Controllers Association which represents 14,000 air traffic controllers of the Federal Aviation Administration. I want to first thank you for this opportunity to appear before the Aviation Subcommittee and also thank you for your past support on our issues.
NATCA's mission is to guarantee and improve aviation and air traffic safety; serve as an advocate for air traffic controllers, and promote competence and pride within our profession.
NATCA believes that the findings of the Coopers & Lybrand report on the FAA presents no new information or original solutions to FAA's problems, is biased, and fails to address any safety related issues. Given their 90 day production deadline, it is impossible to complete a comprehensive analysis of FAA funding. NATCA has addressed several fundamental problems with the C&L study: the size of the current workforce, pay and compensation, technology, and privatization.
The FAA states there are 17,080 full time air traffic controllers. C&L further overstates their inflated estimated by citing there are 17,300 air traffic controllers. In reality there are only 14,343 full-time air traffic controller—2,000 fewer than existed prior to the 1981 PATCO strike. However, C&L fails to recognize that over the last 15 years the number of supervisors has actually increased with 2,000 fewer controllers and 100 fewer field facilities due to the contracting of Level 1 towers.
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C&L also attacked the productivity of the air traffic controller. However, when productivity is viewed objectively, you find that it has actually increased at a faster rate than any other segment of the Federal workforce. For example, since 1981 air traffic operations have increased 36 percent while the number of critical front line air traffic controllers has decreased dramatically.
The FAA's inability and unwillingness to staff our air traffic control facilities properly forces the FAA to compromise air safety on a daily basis. In addition, we as air traffic controllers aren't able to provide the level of safety that the flying warrants and deserves.
C&L is asking us to believe that the FAA's biggest potential source of savings is to deprive air traffic controllers certain benefits every Federal worker enjoys. Moreover, the ideas proposed, such as eliminating the 5 percent air traffic revitalization pay and differentials in premium pay for working on Sundays, nights, and holidays, are in direct conflict with Federal law. Furthermore, these laws were enacted to provide night differential, Sunday and holiday pay to compensate Federal employees for the hardships imposed on them and their families.
Air traffic control is one of the few services within the Federal Government which is mandated to work 24 hours a day, 365 days a year. C&L clearly stated in its report it does not understand the complex work performed by an air traffic controller. C&L clearly does not recognize that America's air traffic controllers sole purpose is to ensure safety. We cannot afford to modernize the air traffic system on the backs of the air traffic controllers.
The C&L report cited the use of the Wide Area Augmentation System as fundamental to repairing FAA technology problems. However, the Department of Defense has denied FAA the use of the L2 Global Positioning System frequency for WAAS which will effectively destroy the program.
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NATCA believes that the proposed fiscal year 1998 funding for this program should be redirected to higher priority programs with near-term benefits, such as: oceanic system improvement, data link, conflict probe, center/Tracon automation systems, collaborative decision making, and human factors.
Additionally, C&L has advocated a plan to eliminate overlapping long-range and terminal radar systems over most of the United States to realize an immediate cost savings. NATCA is intensively opposed to eliminating redundant coverage because of the frequency and likelihood of equipment failure. Without redundancy in the radar system, a single failure will cause major delays in service, capacity, and safety because controllers will have to utilize non-radar procedures. Having said this, I cannot overstate NATCA's position regarding change. Safety first.
C&L states that the air traffic controllers are gaming the system. We take serious offense at this gratuitous comment. C&L believes it is qualified to make these recommendations but, once again, admits that it does not understand the complexity of the air traffic controller.
In conclusion, for an independent report mandated by Congress, it is highly suspicious that it is the mirror image of the FAA's 1995 agenda. NATCA is prepared to play an even greater role in aviation safety, to strive for constant improvement, to building coalitions with other nations and organizations to promote positions on safety and technology issues. NATCA will continue to work with the Executive and Legislative Branches to make necessary improvements to the national air space system.
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Thank you, Mr. Chairman and committee members, for your time and consideration of our important issues. I will be happy to answer any questions.
Mr. DUNCAN. Thank you very much, Mr. Fruscella.
The next witness listed is Mr. Thomas Chapman. Mr. Chapman, please.
Mr. CHAPMAN. Good morning, Mr. Chairman. My name is Tom Chapman, and I am Senior Vice President of AOPA Legislative Action.
We enjoy the financial support of 340,000 dues paying members and, together with our affiliated organization, the Aircraft Owners and Pilots Association, we promote the interests of those who contribute to our economy by taking advantage of general aviation aircraft to fulfill their personal and business transportation needs.
Last year, we strongly supported this committee's efforts to cut through the rhetoric surrounding the FAA financing debate to arrive at the FAA's baseline numbers and assess its true out-year needs. We congratulate the committee as well as the Transportation Appropriations Subcommittee for authorizing and funding the audit of the FAA recently completed by Coopers & Lybrand. Overall, the C&L assessment represents a useful snapshot of the FAA's financial status and its likely future. In the short run, we hope FAA will at least discontinue investing time and employee resources pursuing unrealistic funding schemes and instead reinvent itself by implementing some of the recommendations in the audit.
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Frankly, some of the recommendations offered by C&L have been advocated for years by the industry and other outside observers and they have been essentially ignored by FAA.
Mr. Chairman, in a study of such broad scope, it is unlikely that any organization could agree with every one of the audit's assertions or recommendations, and indeed there are a few areas where we would have liked to spend more time with the C&L staff in order to provide some additional perspective. These are discussed in our written statement.
But let's not lose sight of the forest for the trees. C&L has concluded that the $59.8 billion financial projection prepared by the FAA for fiscal years 1997 through 2002 is reasonable but only assuming a status quo operating environment for the FAA. And C&L does not believe the status quo operating environment is an acceptable mid-term or long-term choice for the FAA, and the study specifically makes this point.
The Coopers & Lybrand study justifies our long held belief that FAA's so-called funding crisis is, at worst, a much smaller funding problem. Further, given the numerous internal problems identified by C&L which beset the FAA, we simply see no reason to abandon the current aviation excise tax structure. User fees will not make the FAA a better run agency.
The Coopers & Lybrand report supports our previous contention, made as recently as last month in testimony before this committee, that FAA made unrealistic assumptions in its long-range estimates of growth in air traffic, controller productivity levels, and the commitment of Congress to adequately fund FAA's essential needs.
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Likely areas of potential savings combined with the agency's shaky assumptions cast serious doubt on FAA's assertion that it will experience a funding crisis that only user fees can relieve. Even if additional revenue is necessary, user fees would bring with them substantial liabilities.
As I said, there are some weaknesses in the C&L report. One area where the report is lacking is in its failure to analyze more fully the impact of the Federal budget process. The problems of modernization are not unique to the FAA. A discussion of the FAA's problems in the context of other Federal agencies would have been useful. For example, how and why are agencies such as the Department of Defense and National Aeronautics and Space Administration able to successfully plan for and implement cutting-edge technology within the same Federal budget constraints?
In addition, the C&L study noted at some length the various points in the budget process where FAA's funding requests have been reduced. However, there was no discussion of the merits of those reductions. Surely, C&L does not assume that FAA's funding proposals are always correct and not subject to question by OMB or the Congress. Nevertheless, the results of the C&L study discredit the Administration's primary reason for proposing a system of new user fees to finance the FAA; namely, the supposed financial crisis. Unfortunately, we fully expect the Administration to continue to advocate its dubious user fee scheme using the justification found in this year's budget submission, which is that user fees will ''create a more business-like FAA.''
In response, we simply must ask by what magic are FAA managers suddenly going to become more efficient and businesslike under a user fee system? FAA needs to fix existing problems, which were clearly documented in the C&L study. User fees are not the answer.
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Although we disagree with the Administration's user fee concept, we were intrigued to read in the President's budget that a direct link is needed between dedicated taxes and the level of funding provided for agency operations. We could not agree more. The Truth in Budgeting Act is an example of how Congress can commit to full funding of the airport and airway system which is so essential to our Nation's economy, security, and flight safety. Another promising idea, one that we have developed, is rooted in the fact that the FAA and the air traffic control system is an essential Government function for which users pay the bulk of the expenses. We call our idea ''Linked Financing,'' and we have mentioned it to the committee previously.
Linked Financing is similar in concept to the revenue constrained fund legislation recently introduced by Senators Bond and Chafee. The considerable time and effort we've devoted to developing our Linked Financing idea illustrates our willingness to work with Congress, the FAA, and our industry colleagues to explore new and innovative ways to address whatever shortfall might exist in the future.
In closing, Mr. Chairman, let me briefly address the recently announced composition of the National Civil Aviation Review Commission. As you know, this committee authorized appointment of the National Civil Aviation Review Commission last year for the purpose of reviewing FAA funding alternatives and aviation safety. Transportation Secretary Slater has now appointed 13 of the Commission members. The law creating the Commission clearly stated that Administration appointees were to represent a balanced view of the issues important to all segments of the aviation industry.
It is unconscionable that of those appointed to the Commission not one appointee officially represents general aviation. We're very disappointed in the composition of the Commission because we had great hopes for what we thought would be a distinguished body representing all of aviation that could help determine the future of the aviation system and the best method to fund it. And we're not the only group shut out. The Administration also did not choose to appoint representatives for airline passengers, regional airlines, business aviation or the FAA employees who actually run the system.
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This could have been our best opportunity for a very productive forum and a possible resolution of these issues. But, frankly, we see little hope that anything fair or constructive can come from a Commission so unbalanced that its decisions will never get off the ground. Obtaining full industry or congressional support for the Commission's findings will be difficult, if not impossible.
If you wonder why general aviation doesn't trust Administration proposals to corporatize air traffic control or implement user fees, just take a look at the makeup of the National Civil Aviation Review Commission. The Administration has stacked the deck in favor of its own position and clearly seeks to use the Commission to advance its user fee agenda.
Mr. Chairman, this concludes my comments. I will be happy to answer any questions.
Mr. DUNCAN. Thank you very much, Mr. Chapman. It's not hard to figure where you stand on things.
[Laughter.]
Mr. DUNCAN. Our next witness listed is Mr. Edward Merlis. Mr. Merlis, you may begin your testimony.
Mr. MERLIS. Thank you, Mr. Chairman. I am Edward Merlis, Senior Vice President of the Air Transport Association of America. We appreciate the opportunity to present the views of the commercial airline industry on the independent financial assessment performed by Coopers & Lybrand.
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First, we think it is important to note the foresight of this subcommittee in requiring the preparation of an independent financial assessment of the FAA. As the Congress goes about the difficult task of reducing the Federal deficit, the aviation community has been concerned about the problem of adequately identifying the FAA's financial requirements. We've been stymied in our attempts to identify these financial requirements by shortcomings in the Government's budgeting process.
At one time, we were informed the so-called shortfall between requirements and available funds was $14.2 billion over the next several years. Later, this was re-estimated to $12.1 billion. In light of congressional appropriations for fiscal years 1996–1997, I think we can conclude that the number is even lower now. However, all of this estimating of the shortfall has been done in the vacuum which exists inside the Washington Beltway. We are relying upon estimates based upon Government budgeting; it is clear that the FAA does not have a business plan as that term is commonly used, yet, in effect, it is providing a service, a business.
The independent financial assessment performed by Coopers & Lybrand confirms that the FAA's estimate of its future financial need is not supportable. While the study suggests that $59.8 billion in financial requirements is reasonable, assuming a ''status quo'' operating environment for the FAA, the aviation community cannot afford a ''status quo'' operating environment. This subcommittee, by virtue of the legislation it has designed to change the culture of the FAA, has stated that it will not tolerate a ''status quo'' operating environment. And lastly, and perhaps most importantly, the American people have demonstrated that they don't want a ''status quo'' operating environment.
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Coopers has identified five reasons as to why a status quo operating environment is not acceptable. One, there are no significant productivity improvements shown in the FAA's numbers for the 6-year period. Two, there are no pay-offs from either procurement reform or personnel reform assumed in the FAA estimates. Three, there are no additional significant service or product elimination or administrative savings assumed beyond current levels. Four, none of the additional costs to the FAA in their estimates through fiscal year 2002 (a total increase of $8.5 billion) are offset by any net base reductions. And five, and perhaps most importantly, the FAA's most significant cost element, pay and related costs, continues to grow at significant rates, just over 30 percent between fiscal year 1993 and fiscal year 1998.
Coopers has identified a critical list of priorities for the FAA. We think that these priorities should serve as a guide to where the Management Advisory Council, once it is appointed and confirmed, should focus its attention. We think the Coopers report demonstrates clearly that the FAA must undertake some fundamentally different approaches to budgeting, operating, and planning for improvements in the air traffic control system.
While many of us may wish there were greater quantification of Coopers' findings, the absence of appropriate financial management tools made that task all the more impossible and demonstrates the need for the FAA to undertake a new way of doing business.
My written statement identifies a few aspects of the report which particularly highlight the nettlesome changes which need to occur at the FAA. Specifically, these are in the area of financial management, where Coopers identified some profound problems. We feel that this is another matter that the Management Advisory Council should pursue; that is, to see that the FAA institutes a detailed cost accounting system and the financial management tools that are necessary to operate in the modern world.
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I would like to go over one other area which has to do with airport funding. Coopers finds that the FAA, ACI/AAAE and ATA's own attempts to determine airport capital needs all have varying weaknesses. We agree with these comments about our study and have revised it. Our new assessment, which we shared with your staff last week, more closely resembles the airport capital requirements which Coopers has identified. Suffice it to say, however, that our analysis indicates that even at the higher requirements figure cited by Coopers, existing sources of revenue to pay for airport capital improvements are currently available, obviating the need for an increase in the Passenger Facility Charge.
But let me make one last point which Coopers drove home to us. It's hard to believe that after this subcommittee has authorized in excess of $20 billion for AIP, and a PFC program which has already been authorized to collect $15 billion, the experts tell us that FAA needs to develop a ''model that independently forecasts airport capacity and capital requirements, similar to the manner in which large commercial business enterprises with numerous facilities estimate their funding requirements.''
Just think of it—$35 billion has already been committed or approved by the Federal Government and we are only now trying to figure out how much is required.
Mr. Chairman, I would be pleased to respond to any questions you may have.
Mr. DUNCAN. All right. Thank you very much, Mr. Merlis.
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The next witness is Mr. David Plavin. Mr. Plavin, please proceed.
Mr. PLAVIN. Thank you, Mr. Chairman. I am here representing the Airports Council International-North America and the American Association of Airport Executives. Between us, we represent just about everyone of the airports in the United States. There are lots of numbers being thrown around very cavalierly and we believe that most of the numbers, particularly with respect to airport needs, are not supported by facts and most of them are not supportable.
Airports believe that the size and character of airport investment needs are clear, have long been clear, that they are large, that they are growing, and that they are increasingly underfunded relative to the resources being made available to them, both at the Federal level via AIP programs and at the local level currently restricted by a cap on PFCs and other local funding options. The idea that the status quo is acceptable for airports ought to be just as repugnant as the idea that the status quo is not acceptable for FAA.
Secondly, accepting the estimated need is not the same as Congress accepting the responsibility to fund all of that need. However, there is the need to understand what happens to the rest of that need. In 1990 and again in 1996, this committee requested ACI and AAAE to help the committee document airport capital development needs nationwide, to address airport funding needs, and to establish adequate authorization levels. We believe that the survey we produced has done exactly that. In 1996, as it did in 1990, this comprehensive capital needs survey confirms airport capital development needs on the order of $10 billion a year.
The assessment released last year by ATA stating that airport capital needs are only $4 billion each year ought to be embarrassing for ATA. It ignored the needs of 2900 smaller commercial service airports, general aviation, and reliever airports. I guess that they finally got religion and decided to include them in their latest version.
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Coopers & Lybrand study guesses that airport capital needs are between $7 and $8 billion annually in 1997, which brings us to a total very much closer to the airport assessment even though it is strictly a guess, as they estimate. They also say, however, that it is not clear that capital needs estimates produced by the model that they recommend would really be worth the necessary investment to develop such a model, and we agree.
Finally, the issue of airport monopolies is an old canard long since debunked. Airlines play a heavy-handed role in setting airport priorities today. Airports by default have the responsibility to look out for the consumers and travellers, and they are themselves in competition and don't, in fact, behave like monopolies. No airport that's worth its salt will prevent any new service from coming into its community. Airports want competition; they want it for consumer choice, better air service, competitive air fares, none of which is present in the market today.
We believe that Congress must simultaneously lift the $3 cap allowing large airports at the local level to generate resources necessary to meet safety, security, noise, and capacity enhancement requirements. At the same time, Congress must also make more Federal AIP funds available especially to smaller communities that are highly dependent on that project funding. These smaller airports are often unable to generate adequate resources largely because of smaller traffic bases, limited air service, parking and concession revenues, and so on. Yet, the local residents, air travellers, shippers who rely on these airports have the same airport needs for safe, secure, convenient, and efficient facilities as do customers of larger airports.
Yet, ultimately, it is a mistake and a disservice to continue debating whether airport needs are really $10 billion, $7 billion, or some ridiculously understated lower amount when existing funding from both Federal and local sources falls far short of meeting airport funding needs at any reasonable magnitude.
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We cannot imagine anyone who flies shares the belief of the ATA that the condition of our Nation's airports, or indeed the entire aviation infrastructure, is acceptable the way it is. There is, quite obviously, little interest on the part of the airlines, for example, in responding to the demonstrated demand for additional capacity, renewed infrastructure, improved safety and security, fair access and competition, and a decent level of customer service.
We think the airport needs have long been documented. Customers know them, and models, or their absence notwithstanding, we think it is time to get on with figuring out an intelligent way of funding them. Thank you.
Mr. DUNCAN. Thank you very much, Mr. Plavin.
The final witness on this panel is Mr. Robert E. Robeson. Mr. Robeson, you may begin your testimony.
Mr. ROBESON. Thank you. I'm glad I'm at this end of the table. We appreciate the opportunity to appear before the committee on behalf of the Nation's manufacturers of transport category aircraft, engines, helicopters, and components. Given the nature of that makeup, our remarks are confined to FAA responsibilities on aircraft certification and safety inspection. I'll summarize the written statement, if I may.
Despite the improved outlook for aircraft orders and deliveries, we have a history of continuously searching for innovative ways to improve efficiencies and reduce costs, including new ways of working together with the FAA. In this vein, we applaud the White House Commission on Aviation Safety and Security for its recommendations concerning performance-based rulemaking and an industry-Government partnership to improve aviation safety and efficiency. Key elements in this effort should include increased delegation of authority to make findings on behalf of the Administrator.
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In particular, we urge the FAA to expedite the adoption of expanded use of delegation for organizations. Efficiency will be enhanced where a company's schedule is made less vulnerable to schedule delays caused by shortages of FAA inspectors and engineers. Although the Coopers & Lybrand report criticized FAA projections of expected improvements in efficiency and reduced costs, we believe that significant gains are possible in AVR under this expanded delegation option.
Our industry willingly bears significant costs in support of the FAA not only through the use of the existing delegation options that are available to us, but also through the aviation rulemaking advisory committee, and those are addressed in my statement in some greater detail.
But given our great concern about proposals to empower the FAA to impose so-called user fees on the aviation industry to cover FAA costs incurred in fulfilling its role in safety oversight, I would like to focus the rest of my oral remarks on this issue.
It is well known that historically the FAA has about 75 percent of its budget funded through taxes and fees levied directly on the industry through fuel and ticket taxes. We support the continuation of this system, although we're willing to listen to alternatives. We don't really have a dog in the fight over user fees in the area of air traffic control, for example. We do agree that the FAA needs a stable source of revenue on which it can base long-term planning.
We also support efforts to improve FAA responsiveness to the aviation community. But it does not follow, in our view, that user fees in and of themselves guarantee either funding stability or agency responsiveness. In fact, our experiences lead us to the opposite conclusion.
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We have found that a fully user funded system is less responsive to the private sector. In Europe, there is one civil aviation authority that is fully user funded. In general, that authority is less responsive than other European aviation authorities and the FAA regarding concerns of the private sector. Their system has begun to look like a jobs program. We have excessively large certification and inspection teams coming over here, including trainees, whose expenses we are billed for at hourly rates that exceed those of our senior engineers.
Nor is that the only example. There is one other authority in Europe—and I will shorten this statement considerably—but the short of it is there will be an artificial distinction between two levels of major change for a type design change, one of which will not require their involvement but for which we will be billed, thus showing that their cost in providing a service is not at all related to the charge that we will be faced with to have a change in the type design.
In the United States we have a striking example, and that's the Office of Patent and Trademarks, that has been totally funded by user fees since 1991. At that time the industry agreed with a 69 percent raise in patent fees because there was an urgent need to overhaul and expand the PTO. The assumption was that modernization and responsiveness would result, and those are exactly the arguments made in favor of user fees to support the FAA. However, the very next year the user fees were diverted to other projects. In fiscal year 1998, we find an Administration budget proposed to divert to unrelated Government programs $92 million of the $119 million collected from the patent fees. As a result, the PTO has had to reduce the hiring of patent examiners by 50 percent and drastically curtail its automation efforts.
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This kind of abuse is akin to taking highway funds for purposes unrelated to transportation and we think it's highway robbery.
The checkered history of user fees and the diversion of fees from their intended purpose, coupled with our experience in dealing with foreign authorities indicates to us the arguments of the user fee advocates who tout improved efficiency and better Government responsiveness and an assured revenue stream are belied by the facts. Our experience is exactly the opposite, and that the main rational for advancing these fees therefore disappears.
Finally, we should note who benefits from safety regulation, and that's the general public. My written statement contains a quote from OMB regarding the imposition of user fees on those who receive a distinct benefit from Government services. In the case of safety and regulation, we find that the benefit goes to the general public at large. There is not a particular benefit that accrues to an airline for incurring an inspection or for a manufacturer incurring an inspection.
Thank you for your time, Mr. Chairman.
Mr. DUNCAN. Mr. Robeson, thank you very much.
Mr. Chapman, the study found that there is ''a fundamental change away from general aviation demand.'' What do you think about that?
Mr. CHAPMAN. Well, the history of our industry—you mean in terms of the historical trend over the past?
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Mr. DUNCAN. Just plain simple, is general aviation demand going down? Is that where we're headed?
Mr. CHAPMAN. Yes. Statistically, over the last 10 to 15 years, all the numbers are down in general aviation.
Mr. DUNCAN. And is that going to continue in the future?
Mr. CHAPMAN. Well, it could, Mr. Chairman. There are major efforts underway by our industry, frankly, to turn that trend around. If we're successful, it won't continue. But there is a possibility, if we don't do something about it, yes.
Mr. DUNCAN. You know, we put language in our bill last year and we said that the Secretary should take into consideration or appoint individuals who have expertise in the aviation industry and who are able collectively to represent a balanced view of issues important to general aviation, major air carriers, but general aviation was the first one listed. But I take it from your comments that you feel that there is not one person who has been appointed so far who really is representative of general aviation.
Mr. CHAPMAN. That's correct, Mr. Chairman. There are some excellent people that have been appointed, don't get me wrong, former Congressman and Chairman of this committee, Norm Mineta, is one of the individuals that we suggested should be appointed, and he has, in fact, been appointed and has been asked to chair the Commission. If anyone can take this group and lead them to some kind of a productive outcome, it would be Mr. Mineta. But if you look at the makeup of the Commission, there is no one on that Commission—and we did not suggest Mr. Mineta because we thought he would represent our point of view, we recommended him because we felt he was a quality individual, the type who ought to be on a Commission of this sort—but there is no general aviation representative on the Commission.
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Mr. DUNCAN. Mr. Fruscella, did you find anything good in this report? I take it you feel this $900,000 could have been spent in many, many better ways than on this study.
Mr. FRUSCELLA. Yes, sir. I would figure out the mathematics myself, $900,000 divided by 90 days, that's a pretty nice paycheck, $10,000 a day for doing a study. If I were in a position at Coopers & Lybrand when the question was posed to me, what do you think about the FAA, I would applaud them as long as they keep on giving $900,000.
But getting back to your question, sir, not much in the report that we give any credence to. The possibility exists maybe of consolidating some of their facilities, the regional offices or the Technical Center with the Mike Monroney Aeronautical Center in Oklahoma, there may be some validity to that.
Mr. DUNCAN. Mr. Merlis, Mr. Plavin says you should be embarrassed by the ATA estimates as to airport needs. Are you embarrassed?
Mr. MERLIS. Not at all.
[Laughter.]
Mr. MERLIS. First of all, last year's study was of 421 airports, the 421 primary airports which could impose PFCs. The other 2,100 can't impose PFCs because, there are no passengers at them. It was focused principally to develop the information necessary as to what were the capital requirements at those airports which could levy PFCs. We have gone back this year, as I've said, and we've shared with your staff the numbers which we've come up with, looking at the additional 2,100 or 2,200 airports. Of course these 2,100 additional airports require more money. We now have the number at $6 billion a year.
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But let me point something out. If you raise the PFC, which can only be levied at the 421 airports with passengers, and then take all of the AIP money and give it to small airports, you're going to have a war between donor and donee States which will make ISTEA look like a romp in the park.
Mr. DUNCAN. Mr. Lipinski?
Mr. LIPINSKI. Thank you, Mr. Chairman. I know we have to go vote so I'll make this brief. I thank everyone for being here. I appreciate hearing your words of wisdom. I understand that the study really only took about 65 days, so it's probably $1,200 or $1,300 a day rather than $10,000 a day.
Anybody on this panel that opposes moving to user fees, raise your hand.
[Show of hands.]
Mr. LIPINSKI. Is your hand up or down?
Mr. ROBESON. It depends on the fees. We are opposed to user fees——
Mr. LIPINSKI. I'm just talking about the concept of users fees versus the ticket tax and the other taxes we have in place.
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Mr. ROBESON. I've got airlines pounding on both sides of my head on that.
Mr. LIPINSKI. Well, we'll just leave you out then. You had your hand probably in the right place.
Mr. ROBESON. Well, we're opposed to user fees as they are anticipated for certification, for the safety-related functions. The Administration's long-term plan, in fact, is of a fully user-fee funded FAA. We don't agree that the safety related functions—manufacturing, inspectors, certification requirements—should be funded by user fees. That should come from the general revenues.
Mr. LIPINSKI. Since I gave you an opportunity to comment besides just raising your hand or not raising your hand, does anybody else wish to comment? Okay, you get thirty seconds.
Mr. MERLIS. Because our members at ATA are on both sides of that issue, I have no comment.
[Laughter.]
Mr. LIPINSKI. Very good. If we go into a user fee or if we keep the ticket tax and the other taxes, is anyone here opposed to also going into the general revenue fund and utilizing some money out of that to fund the FAA? If you are, raise your hand.
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[No response.]
Mr. LIPINSKI. Okay. Thank you, gentlemen. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you, Mr. Lipinski.
Mr. Plavin, while the report says that many of these airport needs are perceived needs or a wish list, at least the report does say you need $7 to $8 billion a year which is far more than what you're getting at the present time for airport improvements. Is that correct?
Mr. PLAVIN. Obviously, we don't characterize them as a wish list, but, yes. The bigger problem we have is that even if you accept the Coopers & Lybrand number, there is no stream of funding even if you add AIP and PFCs and local governments and everything else together that comes up to that number. So we think that's the crux of the issue regardless of how you look at it.
Mr. DUNCAN. Well, gentlemen, we have to go vote. Thank you very, very much for your testimony. We appreciate it.
[The prepared statements of Mr. Oberstar, Mr. Costello and Ms. Millender-McDonald Follow:]
[Insert here.]
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Mr. DUNCAN. The hearing is adjourned.
[Whereupon, at 12:25 p.m. the committee was adjourned, to reconvene at the call of the Chair.]
[Insert here.]
39–497CC
1997
REVIEW OF COOPER AND LYBRAND INDEPENDENT FINANCIAL ASSESSMENT OF THE FEDERAL AVIATION ADMINISTRATION
(105–13)
HEARING
BEFORE THE
SUBCOMMITTEE ON
AVIATION
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OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
MARCH 20, 1997
Printed for the use of the
Committee on Transportation and Infrastructure
COMMITTEE ON TRANSPORTATION AND INFRASTUCTURE
BUD SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska
THOMAS E. PETRI, Wisconsin
SHERWOOD L. BOEHLERT, New York
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HERBERT H. BATEMAN, Virginia
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
SUSAN MOLINARI, New York
THOMAS W. EWING, Illinois
WAYNE T. GILCHREST, Maryland
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
JACK QUINN, New York
TILLIE K. FOWLER, Florida
VERNON J. EHLERS, Michigan
SPENCER BACHUS, Alabama
STEVEN C. LaTOURETTE, Ohio
SUE W. KELLY, New York
RAY LaHOOD, Illinois
RICHARD H. BAKER, Louisiana
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
ROBERT W. NEY, Ohio
JACK METCALF, Washington
JO ANN EMERSON, Missouri
EDWARD A. PEASE, Indiana
ROY BLUNT, Missouri
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JOSEPH R. PITTS, Pennsylvania
ASA HUTCHINSON, Arkansas
MERRILL COOK, Utah
JOHN COOKSEY, Louisiana
JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
KAY GRANGER, Texas
JON D. FOX, Pennsylvania
THOMAS M. DAVIS, Virginia
FRANK A. LoBIONDO, New Jersey
J.C. WATTS, Jr., Oklahoma
JAMES L. OBERSTAR, Minnesota
NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
WILLIAM O. LIPINSKI, Illinois
ROBERT E. WISE, Jr., West Virginia
JAMES A. TRAFICANT, Jr., Ohio
PETER A. DeFAZIO, Oregon
BOB CLEMENT, Tennessee
JERRY F. COSTELLO, Illinois
GLENN POSHARD, Illinois
ROBERT E. (BUD) CRAMER, Jr., Alabama
ELEANOR HOLMES NORTON, District of Columbia
JERROLD NADLER, New York
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PAT DANNER, Missouri
ROBERT MENENDEZ, New Jersey
JAMES E. CLYBURN, South Carolina
CORRINE BROWN, Florida
JAMES A. BARCIA, Michigan
BOB FILNER, California
EDDIE BERNICE JOHNSON, Texas
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
JUANITA MILLENDER-McDONALD, California
ELIJAH E. CUMMINGS, Maryland
EARL BLUMENAUER, Oregon
MAX SANDLIN, Texas
ELLEN O. TAUSCHER, California
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
LEONARD L. BOSWELL, Iowa
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania
NICK LAMPSON, Texas
Subcommittee on Aviation
JOHN J. DUNCAN, Jr., Tennessee, Chairman
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ROY BLUNT, Missouri Vice Chairman
SUSAN MOLINARI, New York
THOMAS W. EWING, Illinois
VERNON J. EHLERS, Michigan
RAY LaHOOD, Illinois
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
EDWARD A. PEASE, Indiana
JOSEPH R. PITTS, Pennsylvania
ASA HUTCHINSON, Arkansas
MERRILL COOK, Utah
JOHN COOKSEY, Louisiana
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
KAY GRANGER, Texas
JON D. FOX, Pennsylvania
THOMAS M. DAVIS, Virginia
J.C. WATTS, Jr., Oklahoma
BUD SHUSTER, Pennsylvania
(Ex Officio)
WILLIAM O. LIPINSKI, Illinois
LEONARD L. BOSWELL, Iowa
GLENN POSHARD, Illinois
NICK J. RAHALL II, West Virginia
JAMES A. TRAFICANT, Jr., Ohio
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PETER A. DeFAZIO, Oregon
JERRY F. COSTELLO, Illinois
ROBERT E. (BUD) CRAMER, Jr., Alabama
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
CORRINE BROWN, Florida
EDDIE BERNICE JOHNSON, Texas
JUANITA MILLENDER-McDONALD, California
ELIJAH E. CUMMINGS, Maryland
JAMES L. OBERSTAR, Minnesota
(Ex Officio)
(ii)
CONTENTS
TESTIMONY
Belger, Monte, Acting Deputy Administrator, Federal Aviation Administration, U.S. Department of Transportation, accompanied by Edwin A. Verburg, Associate Administrator for Administration
Chapman, Thomas B., Senior Vice President, Aircraft Owners and Pilots Association Legislative Action
Fruscella, Joe, Eastern Region Vice President, National Air Traffic Controllers Association
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Hawthorne, William Stan, Partner, Government Consulting Practice, Coopers & Lybrand, accompanied by Carolyn L. Smith, Partner, Government Consulting Practice, C. Morgan Kinghorn Jr., Director, and Daniel M. Kasper, Partner, Transportation Consulting Practice
Lautenberg, Hon. Frank R., a U.S. Senator from New Jersey
LoBiondo, Hon. Frank A., a Representative in Congress from New Jersey
Merlis, Edward A., Senior Vice President, Government Affairs, Air Transport Association of America
Plavin, David Z., President, Airports Council International-North America, on behalf of Airports Council International-North America, and the American Association of Airport Executives
Robeson, Robert E., Jr., Vice President, Civil Aviation, Aerospace Industries Association of America, Inc
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Costello, Hon. Jerry F., of Illinois
Lautenberg, Hon. Frank R., of New Jersey
Lipinski, Hon. William O., of Illinois
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LoBiondo, Hon. Frank A., of New Jersey
Millender-McDonald, Hon. Juanita, of California
Oberstar, Hon. James L., of Minnesota
Poshard, Hon. Glenn, of Illinois
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Belger, Monte
Chapman, Thomas B
Fruscella, Joe
Hawthorne, William Stan
Merlis, Edward A
Plavin David Z
Robeson, Robert E., Jr
SUBMISSIONS FOR THE RECORD
Belger, Monte, Acting Deputy Administrator, Federal Aviation Administration, U.S. Department of Transportation, response to question from Rep. Davis concerning FAA Airway Facilities Maintenance Employees Eligible to Retire Between 1997 and 2002
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Fruscella, Joe, Eastern Region Vice President, National Air Traffic Controllers Association, FAA Memorandum, Ronald G. Cooper, Manager, Air Traffic Evaluations Staff, AAT–20, Full-Facility Evaluation, Hyannis FCT (HYA), Massachusetts: July 20–22, 1996
ADDITION TO THE RECORD
National Air Transportation Association, statement
(iii)